By Lucia Mutikani
WASHINGTON (Reuters) -The U.S. Labor Department’s statistical agency should prioritize the production of November employment and inflation reports when the government reopens to ensure Federal Reserve officials have up-to-date information at their December policy meeting, economists said.
The House of Representatives was scheduled to vote on Wednesday on a stopgap funding package that could end the longest government shutdown in history, which has caused the suspension of data collection, processing and publishing by the Bureau of Labor Statistics as well as the Commerce Department’s Census Bureau and Bureau of Economic Analysis.
Only the September Consumer Price Index report was published during the government economic data blackout that started on October 1, making it difficult to get a clear read of the economy, though private institutions tried to fill the void.
The delayed reports for September could be released starting next week. The White House on Wednesday said October jobs and inflation reports might never be released. Both reports have portions that rely on physical data collection that should have happened last month.
“From a monetary policy perspective, you want the November data first,” said Brian Bethune, an economics professor at Boston College. “Ideally, you don’t want the data to be released chronologically … you don’t want to have November data in January. You want the November data first, and then you backfill from that point.”
Fed Chair Jerome Powell told reporters last month that another interest rate cut at the U.S. central bank’s December 9-10 meeting was not “a foregone conclusion,” citing the data fog. The Fed lowered its benchmark overnight interest rate by 25 basis points to the 3.75%-4.00% range at its October 28-29 meeting.
The statistical agencies have indicated they would update release dates once normal operations resumed. Drawing from experiences following the 2013 government shutdown, economists at Morgan Stanley estimated it could take at least three days for September’s employment report to be published, which would be November 19, if the government reopens on Friday.
“These data were already fully collected before the shutdown began and should be released relatively quickly,” said Michael Gapen, chief economist at Morgan Stanley. “Most other major data prints for September will probably take a week or two to be released.”
QUESTIONS SWIRL OVER OCTOBER DATA
Economists are unsure how the government would handle the October data, especially the employment report, made up of two parts – the household survey from which the unemployment rate is derived and the establishment survey from which the nonfarm payroll count is calculated.
The government surveys businesses and households for the employment report during the week that includes the 12th day of the month. Former BLS employees have raised doubts about whether the October CPI and the household survey portion of the employment report would be published.
Data for the household survey is collected from a random sample of households by field workers. The CPI report also requires the physical collection of data.
Data collection for November’s CPI report is also behind.
But some economists believe the BLS could still try to gather the household information for October when it conducts the survey for November’s employment report, something that the former statistical agency employees said would be a challenge given a reduction in staff because of cost cutting.
“The October Current Employment Statistics (which includes nonfarm payrolls) could be collected and released earlier, or BLS may prefer to try collecting it along with November data,” JPMorgan said in a note. “No October (CPI) data collection occurred, so results will need to be skipped or judgmentally filled. Part of November data was not collected.”
Economists said based on private employment surveys and weekly applications for unemployment benefits data that states continued to collect, there had not been a significant change in the labor market since the end of September. The unemployment rate was near a four-year high of 4.3% in August.
Economists also viewed the economy as still polarized, with the technology sector doing well because of a surge in artificial intelligence investment and other sectors performing poorly because of the drag from tariffs.
The nonpartisan Congressional Budget Office estimated annualized gross domestic product growth in the fourth quarter could be reduced by 1.5 percentage points if the shutdown lasted six weeks. While most of the decline in GDP would eventually be clawed back, the CBO projected that between $7 billion and $14 billion would not be recovered.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci )
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