The ongoing government shutdown has made it to its 38th day, making it the longest one in history. The previous record of the longest government shutdown in 2018 – 2019, lasted 35 days and primarily was due to differences among parties over funding of a border wall at the southern border The impact of the current shutdown has been far-reaching, affecting the daily lives of individuals dependent on the federal government for nutritional assistance and those directly or indirectly employed by the government. It has even influenced monetary policy decisions, as policymakers face data gaps regarding current economic conditions.
The ADP report, which is one of the only measures regarding the state of the labor market available during the government shutdown was released earlier this Wednesday. According to the report the private sector added 42,000 jobs during the month of October, which is 12,000 more than consensus estimates. This marks a sharp reversal from the September report which estimated that private employment contracted, shedding 29,000 jobs during the month.
Although private employment showed signs of improvement, the University of Michigan Consumer Sentiment Index painted a more pessimistic picture of the economy. The index fell to 50.3, which is the lowest since level since June of 2022. Notably, consumer short term outlook of the economy remains below that of the longer-term outlook, which could be attributed to the government shutdown and lack of strength in the labor market as artificial intelligence continues to displace parts of the work force.
The Institute of Supply Management (ISM) released survey results from its Manufacturing and Services indexes. These diffusion indexes measure sectoral activity, with values below 50.0 indicating contraction and values above 50.0 indicating expansion. The services sector advanced notably to 52.4, up 2.4 points from 50.0. Meanwhile, manufacturing remained in contractionary territory at 48.7, below both the prior reading of 49.1 and consensus estimates.
Next week we are expecting to receive the Consumer Price Index (CPI) which is a widely used measure of inflation.
Have a great weekend everyone!
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Author
Carson Francis
Financial Analyst
The Baker Group LP
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