The November employment report is coming out at an unusual time—Tuesday in mid-December, rather than (usually) the first Friday of the month—due to the lingering effect of a historically lengthy government shutdown.
The 43-day halt in federal funding caused a sudden freeze on vital economic figures at a critical juncture for American businesses and households.
The slow, steady trickle of postponed data from the past month is building into a surge this week: major releases on retail sales, inflation, and the labor market are due in the next three days.
And the latter two come with a minor holiday bonus: the employment report and the Consumer Price Index release for November will contain about half the data from October.
If it weren’t so unprecedented, it would be quite fitting for a season full of “buy one, get one 50% off” deals.
Tuesday morning’s employment report is anticipated to show that only 40,000 jobs were added last month, with the unemployment rate holding steady at 4.4%—historically low, yet still higher than in recent years.
Nevertheless, economists note that the report this time around might be more than slightly puzzling.
“Government shutdowns do not happen often, so there is always some uncertainty when you have such a major operation like what [the Bureau of Labor Statistics] does for the employment report,” said Daniel Zhao, a senior economist at Glassdoor. “So, I think it pays to be humble approaching the report and be ready for anything.”
Why a Report and a Half on Jobs?
BLS’s monthly labor market survey is compiled from two dependable polls: one of business and government sectors (tracking payrolls, wages, and hours worked), the other of households (tracking labor force status with demographics). The latter survey is conducted in partnership with the U.S. Census Bureau, whose staff interview households and gather source data via in-person visits, phone calls, email, and online.
However, major federal statistical agencies effectively ceased operations during the shutdown, which ran from October 1 to November 12. The vast majority of employees were furloughed, and the agencies themselves halted the collection, processing, and dissemination of almost all data.
As there were no workers available to interview households during the survey week, the BLS later announced that October’s labor force data—including the unemployment rate—would not be available, and the agency would not issue a separate employment report for that month. Instead, October data collected electronically will be folded into the November employment report.
In November, the collection period for both surveys was extended, and extra processing time was allocated, the BLS said. Consequently, the November employment report was pushed back from December 5 to December 16.
Asterisks
“I believe the most likely scenario for the report is a subdued pace of job gains,” Zhao mentioned. “There is certainly a large asterisk on it though.”
This is because the repercussions of the shutdown disruptions should become much more evident on Tuesday: the BLS, with its rigorous transparency practices, inserts notes into reports when important context or technical issues warrant it.
While over 700,000 federal workers were furloughed during the 43-day stoppage, a significant negative number for October followed by a jump in November employment is not expected, wrote Bank of America economist Shruti Mishra in a recent note to investors.
“The business survey counts workers who were paid or expect to be paid for any part of the reference week as employed,” she wrote. “Indeed, the government shutdown had a minimal effect on payroll calculations in 2013 and 2019.”
If anything, data for October and November job openings might be more complete and less subject to revision due to the extended filing and collection schedules, Zhao observed.
September – The “Peak”
While Tuesday’s report will have a more-partial-than-typical picture of the labor market, a slew of private and public data released in recent weeks has helped fill in the blanks.
Payroll giant ADP’s monthly private-sector employment reports estimated a net gain of 47,000 jobs for October and a net loss of 32,000 jobs for November.
Also, new BLS data released last week showed that although job openings increased in October, hiring continued to stall, layoff activity picked up, and employees clung to their jobs with white knuckles.
“I think the September jobs number was probably a high-water mark for what we’re going to see in the more recent data,” said Tyler Schipper, an associate professor of economics at the University of St. Thomas in St. Paul, Minnesota. “I think my estimation is somewhere between 0 and 50,000 jobs between the two reports. One of them might end up being negative and one of them might end up being positive.”
“But I don’t expect a change from this stalemate where we’re not creating enough jobs to keep the unemployment rate down,” he added.
The DOGE Drop-off
Still, even before the shutdown, the October jobs report was projected to show weak, if not negative, employment growth.
Between 100,000 and 150,000 federal workers were expected to drop off the payrolls on October 1, after accepting the “fork in the road” paid leave buyout offers put forth months earlier by the Trump administration’s Department of Government Efficiency initiative.
That’s roughly 5% of overall federal employment and a sliver of overall employment, but the bulk decrease will distort October’s payroll estimates.
It’s possible that October could show a net loss of 65,000 jobs, Mishra wrote, pegging a loss of 120,000 jobs in the public sector and a 55,000-job gain in the private sector.
That would be a steep downturn from the higher-than-expected employment growth of 119,000 jobs in September, a figure that Mishra said could be revised lower.
What Else to Look for in Tuesday’s Report
Beyond the headline payroll numbers and the November unemployment rate, the innards of last month’s establishment and household surveys could provide an even more critical look at how the backbone of the US economy is faring, economists say.
The industry-specific breakdown of job gains will be important to watch, noted Dean Baker, senior economist at the Center for Economic and Policy Research.
Wage growth is expected to decelerate, which could further impede future consumer spending.
The trajectory of the labor force participation rate, the employment-to-population ratio, and unemployment figures will be important benchmarks for how Americans perceive the job market, observed Corey Stalhe, an economist at Indeed Hiring Lab.
“Ultimately, if you are making 100,000 jobs a month, but… the unemployment rate is rising or people are saying, ‘I just can’t find anything; I’m not going to participate in searching for work anymore,’ that will eventually catch up to the labor market,” Stalhe said.
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