"As the government shutdown has rumbled on, a dark cloud is looming increasingly large over the economy. The labor market (at least according to available data sets) shows signs of weakening, presenting a conundrum for members of the Federal Open Market Committee (FOMC). Yesterday, data from payroll platform ADP reported U.S. businesses had shed an average of 11,250jobs a week for the four weeks ending October 25, "suggesting that the labor market struggled to produce jobs consistently during the second half of the month.""
"So far, investors haven't panicked about unemployment-likely waiting on official government data before reassessing their outlook for the U.S. economy. Positive sentiment remains in markets thanks to hints that Washington's government shutdown will soon come to an end. The Dow Jones closed over 1% higher in trading yesterday, with the S&P 500 trading relatively flat. The VIX volatility index also continued to fall, down 2.5%, suggesting analysts believe markets should avoid turbulence in the near-term."
Federal Open Market Committee members have adopted a cautious stance, reducing market expectations for a final rate cut in 2025. Payroll data from ADP showed U.S. businesses shedding an average of 11,250jobs per week for the four weeks ending October 25, signaling inconsistent job creation during late October. Economists caution that private payroll figures lack Bureau of Labor Statistics backing, yet concerns rose that the labor market weakened amid the government shutdown. Equity markets have so far remained resilient, supported by hopes of a swift end to the shutdown and modest gains across U.S., European, and Asian indices.
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