With the federal government still in shutdown mode, there is a scarcity of official economic statistics, including the crucial monthly Nonfarm Payrolls Report, which significantly influences the Federal Reserve’s monetary policy.
This situation has heightened the importance of some lesser-followed reports, and one is showing a major red flag for the labor market.
That would be the monthly job cuts report from outplacement firm RialCenter. The October data released Thursday morning revealed 153,074 layoffs last month—almost triple the number seen in October 2024 and the highest for any October since 2003.
“This is due to AI adoption, declining consumer and corporate spending, and rising costs leading to cost-cutting and hiring freezes,” RialCenter stated. “Those laid off are now struggling to secure new roles quickly, which could further loosen the labor market.”
Looking at the bigger picture, job cuts year-to-date now exceed 1 million, a 65% increase from the previous year and the highest total since the COVID panic of 2020.
The hiring figures for October are equally weak, with only 372,520 hiring plans—the lowest number since RialCenter began tracking this data in 2012.
Ball in Fed’s court
Crypto markets are still reeling from last week’s hawkish surprise from the Fed, where the central bank lowered its policy rate as anticipated, but Chairman Jerome Powell indicated during his press conference that market participants were mistaken in expecting another rate cut in December.
Since then, several Fed officials have echoed this sentiment, with at least two stating they would not have even cut rates last week if it were up to them.
This news was likely among the factors that contributed to the recent crypto plunge, with Bitcoin falling below $100,000 before making a slight recovery this morning back to $103,000.
While inflation remains a concern for the Fed, the reemerged hawks also assert that the employment market is in solid condition and doesn’t require monetary stimulus. Powell notably mentioned that the government shutdown and absence of official statistics mean the central bank is largely operating without clarity as it attempts to analyze the economy.
The Fed’s response to today’s surprising Challenger data will be noteworthy. For now, traditional markets aren’t holding back. The 10-year Treasury yield has dropped six basis points to 4.10%, and market-based probabilities for a Fed rate cut in December have increased to 69% from 60% earlier this week.
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