US Government Shutdown Delays September Jobs Report

The U.S. government shutdown, now in its third day, has delayed the release of the September jobs report.

On the first Friday of every month, the Bureau of Labor Statistics publishes the nonfarm payrolls report—a measurement of net new jobs, the unemployment rate, and other labor data.

For the first time since October 2013, when there was a 16-day shutdown, the federal agency did not release these employment statistics, as GOP and Democratic leaders are in a standoff over federal funding.

The data has already been collected and processed, and the report has likely already been written in draft form, according to William Beach, former head of the Bureau of Labor Statistics (BLS).

Writing for the independent research center, Fiscal Lab on Capitol Hill, Beach noted that the BLS could publish the numbers as soon as the government reopens.

However, there could be hurdles to overcome, as an unscheduled publication would require approval by the Office of Management and Budget (OMB) in the White House.

“OMB approves a publication schedule at the beginning of the year for all statistical reports designated as Principal Federal Economic Indicators,” Beach wrote.

“The jobs report is one of those reports. Any change in that schedule needs OMB approval.”

In an interview with Fox Business, Labor Secretary Lori Chavez-DeRemer confirmed that the September job numbers would be released as soon as the federal government reopens.

“As soon as they open this government, we want to get these numbers out, so that we can determine what this market looks like,” Chavez-DeRemer said on Oct. 3.

“We need that data—we need that accurate data.”

Ahead of the shutdown, early projections indicated modest job growth of 50,000 in September, while the unemployment rate was expected to remain steady at 4.3 percent.

Should the government shutdown persist—prediction markets say it could last for two weeks—the next obstacle could be the October jobs report and other inflation metrics, says Mark Hamrick, senior economic analyst at Bankrate.

“If the shutdown continues, data collection for the October jobs report (survey week around October 12) is at risk. Mid-month inflation reports, critical to assessing the Fed’s path, may also be disrupted. That compounds the uncertainty,” Hamrick said in a statement to The Epoch Times.

The lack of data also prevents another peek at revisions.

In recent reports, the BLS has made sizable downward adjustments to its previous data, with officials and market watchers questioning the bureau’s data-gathering methods and overall accuracy.

Various theories have been proposed regarding the federal agency’s issuance of significant changes to the numbers from previous months, with many attributing this to the declining response rate.

This past summer, President Donald Trump terminated BLS Commissioner Erika McEntarfer and nominated Heritage Foundation chief economist EJ Antoni.

The White House withdrew Antoni’s nomination on Sept. 30.

In a statement to The Epoch Times, Antoni said the current administration’s policy changes cannot be implemented without accurate economic data that is published on time.

He pledged to continue advocating “for the reforms BLS so desperately needs.”

“The American people deserve nothing less than for these improvements to be implemented immediately as part of a larger agenda to make government more efficient and make the American Dream more attainable,” Antoni said.

Market and Policy Implications

Investors and policymakers rely on the monthly jobs report, as well as a series of other economic indicators published by U.S. government agencies, to inform their decisions.

The White House has acknowledged the importance of the bureau’s data.

“Businesses, families, policymakers, and markets rely on timely and accurate public data for their decision-making,” White House spokesman Kush Desai said in a statement to The Epoch Times.

While Wall Street has largely shrugged off the government shutdown—the leading stock market benchmark indexes are cruising to another winning week—the lack of data could have implications for the Federal Reserve.

Chicago Fed President Austan Goolsbee says it is challenging to craft policy without key data.

Speaking to CNBC’s “Squawk Box” on Oct. 3, Goolsbee stated that while the regional central bank is using a concoction of alternative sources—public and private—officials still need the bureau’s numbers.

“What should be in the decision of the Fed are the economic conditions on employment and inflation. That raises the degree of difficulty when we cover up one of the screens, or put a screen where you can’t see the data,” Goolsbee said.

The Chicago Fed currently maintains a series called the “Chicago Fed Labor Market Indicators.” The report—updated twice a month—relies on 11 different data sources to estimate the real-time unemployment rate, hiring rate for unemployed workers, and the rate of layoffs and other separations.

For the week ending Sept. 13, the Chicago Fed estimates little difference from previous months and zero divergence from the August jobs report. The unemployment rate, for instance, remains at 4.3 percent.

Other regional central banks maintain their own sets of labor market indicators.

For example, the Cleveland Fed’s WARN Act Index, which assesses planned layoffs over the next two months, declined 22 percent year-over-year in August.

In the private sector, markets this week depended on payroll processor ADP and global outplacement firm Challenger, Gray and Christmas.

ADP reported that private companies eliminated 32,000 jobs in September.

Meanwhile, Challenger numbers showed that planned job cuts declined 37 percent last month from August.

“It is more difficult than usual to measure the state of the U.S. labor market, with gold-standard economic indicators produced by the federal government unavailable during the shutdown,” Bill Adams, chief economist at Comerica Bank, said in a note emailed to The Epoch Times.

“The alternative data sources imply that the U.S. job market is still in a low-hire, low-fire, low-gear mode.”

Still, with the data currently available, Goolsbee says he is concerned about front-loading interest rate cuts, citing the upside risks to inflation and the downside risks to employment.

The Fed will hold its next two-day Federal Open Market Committee policy meeting on Oct. 28 and 29.

According to the CME Fed Watch Tool, investors overwhelmingly expect another quarter-point interest rate cut from the current target range of 4 percent to 4.25 percent.