Perhaps that’s why the November jobs report – released on December 16 – stole the spotlight. It’s a timely resource, too, with its deep dives into the economic landscape in the wake of last month’s government shutdown. The final report has already been delayed from a scheduled release of December 5 to December 16. This stark turnaround is a direct result of the shutdown that crippled all federal activity between October 1 and November 12. This delay shifted the anticipated timing of the report. It further derailed the collection and processing of a wide variety of other vital employment data.
During the shutdown, over 700,000 federal workers faced furloughs, raising concerns about the potential effects on job growth and the overall economy. Analysts nearly universally are looking for a 40,000 job increase in the month of November. They’re anxious to find out whether the unemployment rate has plateaued at 4.4%. Given the extended collection period for data, experts suggest that this report may offer a more comprehensive view of the labor market than typically available.
Government Shutdown’s Reach
In addition, the government shutdown severely disrupted the operations of the Bureau of Labor Statistics (BLS). BLS ultimately agreed to increase the collection period for both surveys. This change, while having the benefit of allowing additional time to process the data, unnecessarily diverted from what would have been typical reporting timelines. In the past, shutdowns in 2013 and 2019 resulted in very little net impact on payrolls. This time is different. The unprecedented scale and duration of furloughs impacting our federal workforce presents unique challenges.
Daniel Zhao, a senior economist with Glassdoor, acknowledged the uncertainty built into any such forecasts.
“These government shutdowns don’t come around very often, and so there’s always a little bit of uncertainty when you have an operation as large as what the Bureau of Labor Statistics does for the jobs report,” – Daniel Zhao
Zhao stresses the challenges that come with interpreting data gathered in such chaotic and fast-changing situations. “In practice, it’s surprisingly hard to ask people what they were doing in the past,” he explains. He adds that individuals’ recall abilities diminish quickly, making it essential to focus on more current trends rather than retrospective data.
Expectations from the November Report
While analysts and advocates await what these results will bring, they are quick to point out that the industry-specific breakdown of job gains will be the real focal point. The expected net increase of 40,000 jobs indicates a sanguine rate of growth. Others caution that wage growth is set to decelerate even more. This possible slowdown would add new pressure on consumer spending, which is still the linchpin of economic wellbeing.
Zhao articulates a note of cautious optimism about job growth in the report.
“I think there’s a placid pace of jobs growth that seems most likely for the report,” – Daniel Zhao
He cautions that there is a major caveat related to the shutdown’s impact on job data. “There is, of course, a big asterisk on that,” he says, urging stakeholders to approach the report with humility and readiness for any surprises.
Tyler Schipper from the economic consulting firm FHN Financial suggests that prior job numbers may not serve as reliable indicators moving forward.
“I think the September jobs number was probably a high-water mark for what we’re going to see in the more recent data,” – Tyler Schipper
Insights into Labor Market Dynamics
The release of the November jobs report, due out on Friday, Dec. 8th, should offer a pivotal glimpse to a number of critical labor market dynamics. Analysts will closely monitor labor force participation rates and employment-to-population ratios as they assess how Americans are experiencing the job market post-shutdown. As we enter a new chapter in our nation’s recovery, these metrics will be invaluable guideposts to see how economic conditions change.
The longer technical assistance collection period will allow for more robust data. The Working Group envisions this report as a first step to significantly advancing our understanding of the labor market’s trajectory. Zhao reiterates the importance of focusing on future trends rather than getting too caught up in past data recollection challenges.
“So, I think it bears being humble going into the report and being prepared for anything,” – Daniel Zhao
While consumers and policymakers continue to wait for the final findings, the implications of the report may go beyond the jobs count. Going forward, the interaction between employment numbers and shifts in consumer spending behavior will be key in assessing direction and pace of recovery and growth.