With the federal government continuing in shutdown mode, there remains a dearth of official economic statistics, including the all-important monthly Nonfarm PayRolls Report, which plays a major role in informing the Federal Reserve’s monetary policy.
It has thus raised the status of some less followed reports, and at least one flashes a big red signal for the labor market.
That would be the monthly job cut report from outplacement firm Challenger, Gray & Christmas. The October data released Thursday morning showed 153,074 layoffs last month — nearly triple the amount seen in October 2024 and the highest print for any October dating back to 2003.
“This comes as AI adoption, softening consumer and business spending, and rising costs drive the belt and hiring freeze,” Challenger said. “Those who have been made redundant now find it more difficult to quickly secure new roles, which can further loosen the labor market.”
Zooming out paints an equally bleak picture, with year-to-date job cuts now topping 1 million, up 65% from year-ago levels and the highest amount since the 2020 Covid panic.
The October hiring print is similarly weak, with just 372,520 hiring plans for the month, the smallest number since Challenger began tracking this data in 2012.
Ball in Fed’s court
Crypto markets continue to reel from last week’s hawkish surprise from the Fed, where the central bank trimmed its key interest rate (as expected), but Chairman Jerome Powell used his press conference to suggest that market participants were sorely mistaken in assuming another rate cut in December.
Since then, a number of Fed speakers have followed suit, with at least two saying that had it been up to them, they wouldn’t have even cut rates last week.
The news was certainly among the factors that caused crypto to fall over the past eight days, with bitcoin falling below $100,000 before its small bounce this morning back to $103,000.
Yes, inflation was among the Fed’s concerns, but the revitalized hawks also suggest that the labor market is in solid shape and therefore in no need of monetary stimulus. Powell also pointedly noted that the government shutdown and lack of official statistics mean the central bank is mostly flying blind as it tries to decipher the economy.
The Fed’s reaction to today’s shocking Challenger data will be interesting to note. So far, traditional markets are not waiting. The 10-year Treasury yield has fallen six basis points to 4.10%, and market-based odds of the Fed cutting in December have risen to 69% from 60% earlier in the week.
