Anticipation is building as the Bureau of Labor Statistics prepares to release crucial employment data on Tuesday, unveiling the state of the U.S. labor market. This forecast comes on the heels of the longest government shutdown in American history, with both October’s payroll figures and November’s comprehensive jobs report set to be published at 8:30 a.m. ET.
Experts are bracing for an overall decline in job numbers for October, followed by a hint of recovery in November. Analysis reveals conflicting trends: while job losses are expected in October, projections for November suggest a potential uptick. These figures reflect a broader narrative of a labor market in decline, accompanied by a gradually rising unemployment rate.
Optimism on Wall Street presents a mixed picture. For instance, Goldman Sachs forecasts a modest addition of 10,000 jobs, while Citigroup predicts a loss of 45,000 jobs. More pessimistic estimates from Deutsche Bank, Wells Fargo, and Bank of America suggest possible reductions exceeding 60,000 roles. Should the direst predictions materialize, October could witness the most substantial drop in payrolls since December 2020, during the peak of the Covid-19 pandemic.
Several factors contribute to this cautious outlook. October marked the endpoint of the federal government’s deferred resignation program, leading to expectations of a significant decrease in federal employment. Wells Fargo economists project a decline of approximately 125,000 federal positions. Additionally, the fallout from the government shutdown may have prompted workers to exit due to frustration over unpaid furloughs or work, reinforcing the anticipated decline.
While this year has already shown two previous months of labor market contraction—June and August—this trend has not been observed since 2020. The outlook for October is similarly dim, with expectations for downward revisions to September’s job numbers likely compounding the challenges facing the economy.
Looking ahead to November, economists are more hopeful, with Dow Jones polling experts estimating an increase of around 50,000 jobs, even as the unemployment rate is predicted to rise to 4.5%. The sectors expected to see a resurgence in hiring hope to counterbalance the anticipated losses of October.
However, caution persists. Federal Reserve Chairman Jerome Powell emphasized that the data may be partially skewed due to the 43-day shutdown that ended on November 12, which hampered the Bureau of Labor Statistics in collecting critical information for October. Consequently, some metrics, such as the unemployment rate and labor force participation, will not be available for October, necessitating careful interpretation of the upcoming reports.
As analysts and policymakers await the data, there remains a sense of hope that the labor market may stabilize and recover, illustrating the resilience and adaptability of the U.S. economy in navigating turbulent times.