The threat of a U.S. government shutdown casts a formidable cloud over the eagerly awaited release of critical economic data.
The political deadlock over government funding carries the potential to immerse investors, Fed watchers, and policymakers into an unsettling period. A data blackout injects a significant dose of uncertainty into the market equation.
The suspension of these data releases includes government entities, such as the Labor Department's Bureau of Labor Statistics (BLS) and the Commerce Department's Census Bureau and Bureau of Economic Analysis (BEA).
Fed Flying Blind
During the latest Federal Open Market Committee (FOMC) meeting, Jerome Powell underscored the Federal Reserve's commitment to data-driven decision-making on interest rates, emphasizing a meeting-by-meeting approach. However, in the absence of official economic data releases, the Fed may have trouble navigating.
A government shutdown will delay the releases of the September jobs report and the highly anticipated Consumer Price Index (CPI). The scheduled release of the monthly employment report on October 6 and the forthcoming CPI report, initially due on Oct. 12, now hangs precariously in limbo.
New avenues of economic data tracking have emerged in recent years. They offer refuge when government data sources fall silent. Now, these alternative data metrics sourced from the private sector could serve as a guiding light amidst the haze.
5 Things To Watch Amid The Looming Government Shutdown
- Trackingtherecovery.org: Born during the height of the Covid-19 pandemic, the Opportunity Insights Economic Tracker uses data from private companies to show real-time information about variables like employment, consumer spending, and job postings across different areas and income groups.
- ADP employment report: With the Bureau of Labor Statistics' Non-Farm Payrolls (NFP) report out of the picture, investors and economists turn to the ADP Employment Report for insights into the job market's health. This monthly economic report is a collaborative effort between the Automatic Data Processing (ADP) company and Moody's Analytics. It offers data on changes in non-farm private employment in the United States, specifically excluding government jobs and the farming sector. Notably, the ADP report is usually released just two days before the NFP report.
- Indeed.com's Real-Time Job Posting Data: When the BLS' Job Openings and Labor Turnover Survey report is unavailable, investors can turn to the Indeed Hiring Lab as an alternative. This platform allows them to stay informed about labor market details related to job openings. The Hiring Lab is overseen by a team of highly respected economists who offer real-time insights into the global labor market, covering aspects such as hiring trends, salary information, sought-after skills, and employer offerings.
- S&P Global PMIs: The S&P Global Purchasing Managers' Index (PMI) is a crucial economic indicator, offering insights into both the manufacturing and services sectors. S&P Global's PMIs gauge overall economic activity by surveying purchasing managers across various businesses, assessing factors like new orders, production, employment, supplier deliveries, and inventories. A reading above 50 signals sector expansion, while below 50 indicates contraction. These PMIs are released monthly, with September's final manufacturing reading on Oct. 2, and the service sector on Oct. 3.
- ISM's Gauge of Price Paid: The "Prices Paid" subcomponent of the ISM (Institute for Supply Management) Manufacturing Purchasing Managers' Index (PMI) could offer valuable insights into price pressure dynamics when the BLS' producer inflation metrics are not available. The price-paid subcomponents in the ISM PMI determine if the costs of raw materials and inputs procured by manufacturers are on the rising, declining, or holding steady. It holds broader significance, as it can serve as an early indicator of potential inflationary pressures that extend into the wider economy. The ISM report is published on the first business day of the month.