Background on the Situation
The US economy experienced job losses in October, primarily due to reductions in government and retail sectors. Meanwhile, cost-cutting measures and the adoption of Artificial Intelligence (AI) by companies led to an increase in announced layoffs, according to recently published data.
Private Employment Reports Indicate a Deteriorating Job Market
Private employment reports suggest a gloomy outlook for the job market. Revelio Labs, an employment analytics firm, reported that 9,100 jobs were lost in October, with a decrease of 22,200 positions in government employment.
It remains unclear whether these job losses reflect employees who accepted severance packages and left government payrolls in late September or federal workers who have been furloughed during the government shutdown—the longest in US history.
The retail sector shed 8,500 jobs, according to the data. However, there were modest increases in education and healthcare services, adding 22,000 jobs.
Rising Announced Layoffs and Unemployment Estimates
Announced layoffs surged 37% in October, reaching 43,600, according to Revelio Labs. The Federal Reserve Bank of Chicago estimated that the unemployment rate rose to 4.36% in October from 4.35% in September, rounding up to the 4.4% typically reported by the Bureau of Labor Statistics (BLS).
The Federal Reserve Bank of Chicago has been providing bimonthly unemployment rate estimates since just before the government shutdown. The most recent BLS figure, from August, placed the rate at 4.3%, the highest since October 2021’s 4.5%.
Government Shutdown Impact on Job Market Assessment
The prolonged government shutdown, now exceeding a month, has delayed the release of the anticipated September employment report from the Department of Labor. Moreover, the October report, scheduled for release on Friday, will also not be published, raising doubts about its eventual publication once the government reopens.
Key Sectoral Changes
- Government: Lost 22,200 jobs in October, possibly due to employees accepting severance packages or furloughed workers.
- Retail: Shedding 8,500 jobs in October.
- Education and Healthcare Services: Added 22,000 jobs in October, showing resilience amidst broader job market challenges.
Increasing Layoffs and Unemployment Concerns
Announced layoffs rose by 37% in October, totaling 43,600. The Federal Reserve Bank of Chicago estimates that the unemployment rate climbed to 4.36% in October from 4.35% in September.
Data Reliance on Private Sector Reports
With the government shutdown obstructing official economic data release, private employment reports have become crucial in understanding the current state of the US job market.
