Government Shutdown Complicates Job Data Analysis
Private payrolls in the United States fell sharply in September, deepening uncertainty about the labor market as the federal government shutdown prevents the release of official employment data. The Bureau of Labor Statistics (BLS) is unlikely to issue its monthly jobs report this week, leaving investors and policymakers reliant on private data sources like payroll processor ADP.
According to ADP’s latest report, private-sector employers cut 32,000 jobs in September. August’s previously reported gain of 54,000 was revised down to a loss of 3,000, reflecting what ADP called a “rebenchmarking” of its data. Chief economist Nela Richardson said the revisions do not change the broader trend: “Hiring momentum has slowed from the beginning of the year through September.”
Revisions Reflect Slowdown, Not Collapse
ADP’s rebenchmarking process, similar to the BLS’s annual recalibration, adjusts estimates based on the Quarterly Census of Employment and Wages—a more comprehensive but lagged dataset. Richardson explained that the updated figures show a consistent slowdown rather than a sudden contraction. “Though the numbers changed, the story remains the same,” she said, noting that the adjustment reduced September job estimates by 43,000.
Small businesses were the hardest hit, with job losses spanning sectors such as professional services, leisure, and hospitality. Health care continued to be the lone bright spot, contributing steady gains amid otherwise weak private-sector performance. ADP’s estimates fell well short of economists’ expectations for a 50,000-job increase, highlighting the growing strain on smaller employers.
Signs of Labor Market Stagnation
The ADP data aligns with broader evidence of a cooling labor market. The most recent BLS figures, released before the shutdown, showed just 22,000 jobs added in August and an unemployment rate of 4.3%, the highest in nearly four years. Job gains in June were revised negative, and the hiring rate fell to 3.2%—matching its lowest level since 2013 outside the pandemic period, according to the Job Openings and Labor Turnover Survey.
Economists had projected modest recovery in September, but the ADP data now suggests further deceleration. The slowdown, compounded by uncertainty over fiscal policy and trade, has rattled financial markets. U.S. stocks fell on Wednesday as concerns about the shutdown and labor weakness weighed on investor sentiment.
Federal Reserve Faces Policy Dilemma
The Federal Reserve, which meets later this month, will have to make rate decisions without its usual array of labor data. Despite the data gap, many economists believe the central bank remains on track to deliver another quarter-point interest rate cut. Joe Brusuelas, chief economist at RSM US, argued that persistent hiring weakness and policy uncertainty justify additional easing.
“Hiring is at risk as policy uncertainty driven by trade and immigration policy, along with demographic challenges, impacts labor supply,” Brusuelas wrote. He added that the government shutdown and the threat of further job cuts are weighing heavily on business confidence and likely to suppress payroll growth in the near term.
With official data frozen and private surveys showing clear signs of a stall, the September labor picture underscores a broader economic concern: while the U.S. has avoided a sharp downturn so far, the foundations of its job market are showing strain.