There is a lot of concern about the current health of the U.S. labor market. The market itself has been showing signs of weakening, even with the lack of data being released as a result of the government shutdown. In the past couple of weeks, ADP has been the source of data regarding the labor market. They have reported that there was a loss of 13,500 jobs a week in the private company sector over the span of the last four weeks. As a frame of reference, there was a loss of 2,500 per week in the previous update that was given. As a result of the government shutdown, there will again not be a lot of data to use for the FED when it meets again in December. Advocation for a cut has shifted the market to expect a cut to rates in the next month, and there is little data that will be released to alter that expectation. The Goldman team has said that they believe that there will be two more cuts following the December rate cut, come the new year.
https://www.cnbc.com/2025/11/25/private-payroll-losses-accelerated-in-the-past-four-weeks-adp-reports-.html
This definitely shows how quickly the labor market is weakening, especially with job losses jumping this much in just a few weeks. With limited government data because of the shutdown, it makes sense that markets expect the Fed to cut rates in December, since the ADP numbers are basically the only direction the Fed can go off right now.
ReplyDeleteI think that the recent ADP report definitely points to some cooling in the labor market, but I also think that it's important to note that there has been some unexpected job creation (though not at the level it usually is). The lack of data following the shutdown makes it harder to see the full picture, and it looks like even the job growth we have is uneven and is more resilient in industries not heavily reliant on consumer confidence and not too rate-sensitive. It'll be interesting to see if the increase in job creation in November could cause the Fed to ease off cutting rates in favor of tackling inflation.
ReplyDeleteThe job market is definitely a point of contention for the Fed going forward into its December meeting. I believe the market has already priced in at least one rate cut for December as equities continue to rally to all-time highs. I believe we are in a slow fire no no-hire type of job market right now where employers don't want to fire any employees, but they also don't want to hire any new employees with uncertainties regarding tariffs and AI effectiveness still looming over the horizon.
ReplyDeleteThe jump in private payroll losses you describe makes the job market look a lot softer than headline data suggests. Do you think these weakening labor numbers will change how confident consumers feel going into 2026?
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