Friday, October 3, 2025
Pre-market futures are mostly in the green this morning, although heading south with an arrow a half hour before the open. A dearth of economic data this morning due to the continuing federal government shutdown, including the all-important Employment Situation report from the U.S. Bureau of Labor Statistics (BLS), which had been due out this morning.
The Dow is currently +44 points, the S&P 500 +1.5 points and the Nasdaq +0.25 points. The small-cap Russell 2000, after having dipped a toe into the red momentarily, is now +6. All of these indexes are in the green for the trading week, plus-mid-single digits for the month, and double digits (except for the Dow, +9%) year to date.
The government shutdown comes at a particularly inopportune time for labor market data. We have seen a rapid deceleration of non-farm payrolls over the past year, and today’s numbers would have helped us understand whether a bottom is being formed or the Employment Situation has farther to fall.
Take the trailing four-month average in new jobs filled from the BLS: +27K, including a -13K reported (upon revision) for June. The prior four-month average was almost +100K jobs more per month: +123K. Before that, we see a four month average of +222K — almost another +100K above that. Where is the labor market headed? Inquiring minds wants to know.
The Unemployment Rate was expected to remain at an overall fairly benign 4.3%, but this does not tell the whole story. For months, if not longer, we have reminded market participants in this space that retiring Baby Boomers (and older Gen-X) were effectively taking workers out of the labor force — that final pink slip simply became an opportunity to enter that next phase of life.
But we also should consider young people just leaving school: if they have yet to find meaningful employment, they’re not yet considered part of the workforce, meaning their unemployment does not show up on the Unemployment Rate, either. Even the U-6 number in the BLS report — aka “real unemployment” — doesn’t account for these citizens, and at +8.1% for August, it’s already the highest level we’ve seen since October of 2021.
Thankfully, private-sector data is not shut down currently. After the opening bell rings in today’s normal trading session, S&P final Services PMI and ISM Services, both for September, are expected roughly in-line with prior-month prints: +53.9% on S&P and +52.0% on ISM. Both figures are importantly north of the 50-threshold, which determines growth from loss.
Otherwise, we’re still a couple weeks away from the onset of Q3 earnings season, which will coincidentally be the same week we (won’t) see fresh Consumer Price Index (CPI) and Producer Price Index (PPI) for September, including a new Inflation Rate. This will increase the difficulty for the Fed, at its next monetary policy meeting on the 28th and 29th of this month, to determine whether inflation is benign enough — and the labor force struggling enough — to continue cutting interest rates.
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