This month’s employment report from the Labor Department, originally slated for today, has been delayed due to the ongoing federal government shutdown stemming from budget disputes in Congress. Consequently, the precise figures remain elusive for now. However, we can glean insights from other data sources to piece together last month’s labor market dynamics. Notably, updates from the Institute for Supply Management on both manufacturing and services sectors can serve as valuable indicators for understanding payroll trends. In particular, the employment components within the Manufacturing and Non-Manufacturing reports are particularly helpful.
Due to the federal government shutdown, the anticipated employment report for September, originally set for release tomorrow, will likely remain undisclosed this week. In contrast, today’s weekly update on jobless claims has not been affected, at least for now. New claims for jobless benefits increased by 1,000, bringing the total to a seasonally adjusted 308,000 for the week ending September 28. Interestingly, certain parts of the Labor Department seem to function better than others during this fiscal turmoil. The primary takeaway from today’s data is that claims are still hovering near a seven-year low. Additionally, the year-over-year rate of decline remains significant, which is a positive indicator for upcoming labor market trends.
The upcoming employment report for September has been officially postponed due to the government shutdown. However, we can anticipate that private nonfarm payrolls in the U.S. are projected to increase by 192,000 (seasonally adjusted) according to The Capital Spectator’s econometric forecast. This projection is significantly higher than the previously reported August figure of 152,000. Furthermore, this estimate for September surpasses several consensus forecasts based on economists’ surveys.
According to the latest ADP Employment Report, private payrolls increased by 166,000 last month on a seasonally adjusted basis, slightly up from the previous month’s 159,000. Despite this improvement, the pace remains relatively slow when viewed in a broader historical context. On a positive note, the year-over-year growth in private payrolls rose to 1.88% last month compared to the same period last year, marking the fifth consecutive month of improvement in the annual rate of increase. This increase represents the highest annual growth in over a year. Overall, the ADP data suggests that the forthcoming government payroll report would demonstrate slightly better numbers from the prior month — if it were to be released, but due to the shutdown, that remains uncertain.
The federal government shutdown has led to delays in various economic reports. Evaluating the business cycle is already complex, and the current circumstances add another layer of difficulty. The scheduled September payrolls report from the Labor Department is now postponed indefinitely. This situation underscores the importance of today’s ADP Employment Report, which might be the sole available metric for assessing changes in September’s payrolls.
The ISM Manufacturing Index registered a modest increase in the most recent September update, surprising many economists who had anticipated a decline. The index rose to 56.2 last month, which constitutes the fourth consecutive month of growth and aligns with The Capital Spectator’s average econometric expectations. This early glimpse into September’s economic profile indicates that growth trends persist, assuming the fiscal disruptions in Washington do not have a prolonged impact.
Global markets had a robust recovery in September, with nearly all major asset classes showing significant gains. The only notable exception was a nearly 3% retreat in broadly defined commodities. Overall, it was a bullish month across the board, with foreign real estate and REITs rising by an impressive 8.6%. Additionally, emerging market equities experienced a significant revival, climbing 6.5%, marking their best performance in over a year. Unsurprisingly, the Global Market Index—an unmanaged, market-weighted benchmark of all principal asset classes—recorded a commendable gain of 3.9%. This represents the highest monthly increase for the GMI since January 2012.
Unless Congress can quickly reach an agreement, the U.S. may face significant economic uncertainty. Two critical dates are approaching: tomorrow, October 1, when the federal government might shut down if budget disagreements persist, and October 17, when the government risks entering a technical default if Congress fails to raise the debt ceiling and approve necessary spending measures already discussed and passed. The implications of these scenarios remain unclear, but the likelihood of economic turmoil increases the longer these issues are unresolved. Welcome to the increasingly bizarre landscape of dysfunctional governance in the United States.
The ISM Manufacturing Index is anticipated to rise to 56.2 in tomorrow’s September update, as per The Capital Spectator’s average econometric forecast. This represents a slight increase from the previously reported 55.7 for August. Moreover, this forecast is higher than three consensus estimates from economist surveys, which predict a decline in today’s ISM number.
● The Age of Oversupply: Overcoming the Greatest Challenge to the Global Economy
By Daniel Alpert
Adaptation via PBS Newshour
In recent decades, we have witnessed an unprecedented global influx of affordable labor and capital. This trend has significantly influenced the economic challenges faced by developed countries today. Yet, the majority of policymakers and the public remain largely unaware of these developments, as many political leaders, economists, and think tanks persist in supporting supply-driven solutions to the economic malaise — what some might call “supply-side zombies.”
