Labor Slowdown Seen in High Firings, Slow Hiring, and Fewer Openings

Investors probably won’t be getting September’s nonfarm payroll report on time, but luckily, there are other sources of data that can help paint a picture of the labor market.

Unfortunately, the picture isn’t all that pretty.

The job market remains on solid footing overall, with the unemployment rate near a historic low of 4.3%.

However, cracks are beginning to emerge. This week, data from ADP showed the private sector lost 32,000 jobs in September, badly missing expectations. Markets also took in a slew of weak employment data on Thursday that suggested the job market in stumbling.

It’s a balancing act for markets. Investors want to see data that supports the case for more Fed rate cuts but doesn’t weaken enough to suggest a full-blown recession.

With the government shutdown underway, Friday’s scheduled nonfarm payroll report is likely to be delayed, but there are other sources that investors can look to.

Here are the latest warning signs the job market flashed:

Job openings are falling

There were 17 million job openings in September. That’s down 17.2% year-over-year, according to data from the workforce intelligence firm Revelio Labs.

Seasonally-adjusted active job postings were at their lowest level in at least three years, the firm said.

Job openings saw the steepest drop in the professional and business services industry, which saw openings decline 31.4% year-over-year. That was followed by the government sector and “other services,” with openings in both areas down 30.5% year-over-year.

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“Heightened uncertainty is prompting firms and investors to delay new projects and slow hiring, softening labor demand. Looking ahead, fewer postings point to even weaker job growth,” Revelio’s report said.

Hiring plans are running at the slowest pace since the Great Recession

Employers have announced plans to hire 204,939 workers so far this year, according to data from Challenger, Gray & Christmas, down 58% compared to the same period last year.

That’s the lowest number of workers US employers have said they planned to hire over the first nine months of the year since 2009, the outplacement firm said.

The drop is largely due to subdued seasonal hiring. Challenger said it recorded just 100,800 seasonal hiring plans last month, a fraction of the 401,850 seasonal hires that were planned by October of last year.

“With lower consumer confidence and tariff pressures ahead, we predict the hiring season will be muted,” Andy Challenger, the senior vice president at Challenger, Gray & Christmas, said of hiring in the retail sector, which makes up a significant portion of new employment heading into the holidays.

Employers are firing at the fastest pace since 2020

US employers have announced plans to cut 946,426 jobs so far this year, according to Challenger data. That’s the highest number of planned job cuts for the year-to-date period since 2020, when a total of 2,082,262 cuts were announced over the first nine months of the year.

“It’s very likely job cut plans are going to surpass a million for the first time since 2020,” Challenger said in a statement. “Previous periods with this many job cuts occurred either during recessions or, as was the case in 2005 and 2006, during the first wave of automations that cost jobs in manufacturing and technology,” he added.

Actions stemming from the Department of Government Efficiency were the top reason driving job cuts this year, per the firm’s analysis. Market and economic conditions were the second-most common reason for planned firings, followed by closings, restructurings, and bankruptcy.