What private data says about America’s job engine

The US job market has become one of the economy’s biggest question marks.

With the government shutdown stretching into its second month, now the longest in US history, investors and government officials have been left flying blind. No jobs report, no JOLTS data, and no clear understanding of how hiring, wages, or participation are actually holding up.

Private and survey data filled part of that gap this week, painting a picture of a labor market that’s holding up but losing steam as layoffs climb and confidence slips.

“Hiring has dramatically slowed,” Betsey Stevenson, professor at the University of Michigan and former member of the Council of Economic Advisers under former President Barack Obama, told Yahoo Finance on Friday.

“So if you have a job, great, but if you lose it, you’re kind of in more trouble than you would have been a year or two ago,” she said.

Her warning aligns closely with the latest private data.

According to payroll processor ADP, private employers added 42,000 jobs in October, the first monthly gain since July, but still a fraction of what investors saw earlier this year. Hiring was strongest in the trades, transportation, and utilities, while the professional services and information sectors, key drivers of white-collar growth, both lost jobs.

Hardika Singh, economic strategist at Fundstrat, said in a Thursday note, “ADP private payrolls said that the number of jobs added grew last month. But the creation isn’t coming out of predominantly AI-related industries, which is a little shocking considering that investors are betting on AI advances to become a primary driver of economic growth.”

The bigger takeaway, Singh argued, is that while corporate profits are benefiting from AI-driven productivity, the same can’t be said for workers: “You can’t be excited about stocks trading just below all-time highs when you fear that you’re going to lose your job.”

To that point, layoffs are on the rise, another sign of a labor market that’s cooling beneath the surface.

Read more: How to financially survive a job furlough

Challenger, Gray & Christmas reported over 153,000 job cuts announced in October, the worst for that month since 2003. The firm cited cost-cutting, AI adoption, and pandemic-era overhiring as major reasons behind the spike.

All told, companies have announced more than 1.1 million layoffs so far this year, a 44% increase from the total number of layoffs in 2024. Tech and retail have led the reductions, with notable announcements from Amazon (AMZN), Target (TGT), and UPS (UPS), among others.

Together, the reports point to a job market that’s steady but far less dynamic than a year ago — one where workers are staying put, companies are cautious, and confidence is quietly eroding across the economy.

The University of Michigan’s latest survey, released Friday, showed consumer sentiment plunged to 50.3 in November, the lowest since 2022, as worries over the shutdown and rising prices weighed on households.

Respondents with larger stock holdings reported stronger sentiment, highlighting the K-shaped nature of the recovery as market gains accrue mainly to wealthier households.

Read more: What is a ‘K-shaped’ economy, and what’s causing the divide?

“Rising inflation and a slowing labor market is a recipe for a really uncomfortable economy,” Stevenson said. “Nobody wants to live in an economy where there’s a tiny number of elites and everybody else can barely hang on to what they have.”

That unease is spilling over to policymakers, who are now trying to gauge the health of the labor market without their usual guideposts.

Yung-Yu Ma, chief investment strategist at PNC Asset Management Group, told Yahoo Finance, “The Fed doesn’t have great data. … The direction that it’s feeling is a softening labor market.”

He called the private readings a “mixed bag,” adding, “It’s a challenging environment to not have the best data to go on.”

Still, Ma said the Fed is likely to interpret recent trends as evidence that “the labor market is weakening,” keeping the door open for future rate cuts once the shutdown ends and data resumes.

Markets seem to agree. As of Friday afternoon, traders were pricing in a roughly 70% chance of a December cut, according to the CME FedWatch tool.

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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