US Shutdown, Alternative Data: Job Market Weak
The US government entered its 15th shutdown since 1981, with approximately 750,000 employees furloughed. The BLS delayed the release of key data such as the September poverty rate and nonfarm payrolls. The weekly poverty claims, factory orders, and construction spending reports for August were also delayed. The Fed was scheduled to meet on October 28–29 to decide on its next interest rate move.
Instead, the Chicago Fed released a “real-time” estimate that put the poverty rate at 4.3% in September, the same as in August—signaling no sharp departures. However, the details showed the rate of unemployed workers declining slightly, while layoffs/separations rose slightly, putting limited upward pressure on the rate. Some economists also believe the stability of the headline unemployment rate is contributing to the decline in the number of foreign-born workers.
With a weak range and a lack of official data, the market believes the Fed is poised to cut its benchmark interest rate by another quarter point—after cutting it last month to 4.00%–4.25% in the wake of the labor market weakness. "We'll rely on the data as it comes," said Chicago Fed President Austan Goolsbee, noting that the new figures indicate a stable labor market. If the shutdown ends quickly, some data could still be available before the Fed meeting. (ads)
Source: Bloomberg
