U.S. Job Market Shows Signs of Weakening: What It Means for Canada

U.S. Job Losses Through Late October

U.S. firms were shedding more than 11,000 jobs per week through late October, according to payroll processor ADP's latest real-time estimate of job market trends released on Tuesday.

Conflicting Signals in Labor Data

While an ADP report from last week estimated the U.S. economy added 42,000 jobs overall in October compared to the previous month, the new weekly estimates reveal how hiring trends are evolving on a more granular basis. The week-to-week data points to further weakening in a labor market that Federal Reserve policymakers are monitoring closely.

Economist's Perspective

"The labor market struggled to produce jobs consistently during the second half of the month," said Nela Richardson, ADP's chief economist. ADP recently began issuing weekly payroll estimates as a way to augment its monthly jobs report, providing more timely insights into employment trends.

Implications for Federal Reserve Policy

The data could reinforce some Fed policymakers' arguments that developing job market weakness warrants further reductions in the U.S. central bank's benchmark interest rate. The Fed has already reduced its policy rate by a quarter percentage point at each of its last two meetings, and investors expect another quarter-percentage-point cut at the December 9-10 meeting.

Alternative Data Sources During Government Shutdown

ADP's payroll data is among several private-sector sources that policymakers have referred to as an alternative to official statistics, which have been unavailable during the current U.S. government shutdown. If the shutdown ends this week following the U.S. Senate's passage of a temporary funding bill, Fed policymakers should see the flow of data from the Bureau of Labor Statistics resume in time for their next meeting.

Reporting by Howard Schneider