US Labor Market Cooling, Not Crashing, Based on Alternative Data

Initial Jobless Claims Data

• 📈 Initial jobless claims rose by 10,000 to 229,000 for the week, remaining at the higher end of recent months.
• ⚠️ Continuing claims are also edging higher, suggesting potential further weakening in the labor market.
• 🏛️ Continuing claims for federal workers have surged to over 23,000, the highest since 2019, possibly due to the government shutdown.

Alternative Labor Market Indicators

• 📊 A review of alternative jobs reports indicates a cooling labor market, but not a significant crash.
• 💡 Signs of strength include ADP preliminary data showing average weekly job gains and an increase in the national report for job gains.
• 📉 Signs of weakness include a rise in Challenger job cuts, a downward trend in Indeed job postings, and manufacturing/service employment indices remaining below 50.

Interpretation and Future Outlook

• 🧐 The Fed is likely analyzing this alternative data, though good alternative data on prices is still needed.
• ❓ There is uncertainty about the current state of the job market, with arguments for both a stable and an unstable market.
• 🚀 It is considered unlikely that there is a major swing in the jobs report that isn't reflected in the alternative data.
• 📉 While layoff data from Challenger shows the worst October since 2003, this may not indicate cyclical weakness due to attrition and restructuring, especially in the tech sector.