Our US labor market is at an important and historic crossroads. October’s Challenger report provides evidence of the growing delay in seasonal holiday hiring announcements, which have moved from September to October. This shift has far-reaching implications for the future of employment as a metric. This is particularly difficult for the Nonfarm Payroll (NFP) data for the month. Observers are questioning whether this delay indicates a broader trend in the labor market or if it is merely a temporary anomaly.
As we showed in September’s Jobs Report, recent trends in employment are sending out some mixed signals. Nonfarm payrolls bounced back strongly, increasing by 119,000 jobs. This amazing uptick couldn’t be further from last month’s downward revision where 4,000 jobs were lost. The unemployment rate increased as well, climbing to 4.4%, an increase from 4.3% in August. This coinciding increase in unemployment, even as jobs are being created, raises broader issues related to future labor market stability and the current economic climate.
The recent tardiness with holiday hiring announcements may have meaningful impact on October’s NFP data. Experts are concerned this delay may damage the month’s job numbers. Seasonal hiring typically provides an inflationary boost to payroll numbers. Conversely, if companies adapt by increasing hiring in the following months, the delayed announcements could lead to improved figures later on.
Weekly data trends paint an ominous picture of negative momentum into the end of October, bolstering fears that the deteriorating labor market could have further to fall. Things get trickier when you throw in consumer sentiment indicators. The University of Michigan’s widely watched consumer sentiment index dropped to 50.3 in November, its lowest reading since June 2022. Sentiment continues to decline as consumers are more worried about the future. This transition might be related to increasing unemployment and uncertain job expansion.
Consumer sentiment is changing in big ways depending on income. Further, households in the top tercile have experienced the fastest recovery, all the while households in the bottom tercile continue to struggle. The difference between these income terciles disappeared during the pandemic years, showing that the economic pressures brought about by the pandemic hit all income groups equally. Since Liberation Day, the picture begins to change, as tariffs have exacerbated differences in consumer optimism.
The next Job Openings and Labor Turnover Survey (JOLTs) report for October is on the way—stay tuned! Watch for it, coming your way on December 9th. This report will provide more detailed information about job openings and labor turnover. As we get closer to year-end, that too should make plain where the labor market stands. As analysts monitor these developments, they remain cautiously optimistic about potential rebounds in the job market, despite current challenges.