Unemployment Holds Steady, but Hiring and Layoffs Shift
The U.S. labor market showed further signs of cooling in September, with unemployment remaining largely unchanged while both hiring and layoff activity weakened, according to new data released Thursday. The Chicago Federal Reserve reported that the unemployment rate inched up to 4.34%, just shy of hitting its highest level since October 2021.
Layoffs remained steady at 2.1%, while the hiring rate dipped to 45.2% — down 0.4 percentage points from August. These indicators are part of a new dashboard launched by the Chicago Fed to track labor market trends amid ongoing economic uncertainty and limited federal data due to the current government shutdown.
Challenger Data Highlights Alarming Drop in Hiring
A separate report from outplacement firm Challenger, Gray & Christmas revealed that layoff announcements dropped by 37% month-over-month and were down 26% compared to September 2024. However, the overall number of layoffs planned in 2025 remains high, totaling 946,426 — already 24% above all of last year.
Hiring plans, meanwhile, have plummeted. Only 204,939 new hires have been announced so far this year, marking a 58% decline from the same period in 2024 and the lowest figure since 2009 during the post-financial crisis recovery. According to Challenger’s labor expert Andy Challenger, these levels have historically only been seen during major downturns or technological disruption periods like those in 2005 and 2006.
Shutdown Disrupts Federal Employment Reporting
The federal government shutdown, now in its second day, is also disrupting access to critical labor market data. Regular weekly jobless claims figures from the Department of Labor were not released Thursday, and Friday’s key nonfarm payrolls report from the Bureau of Labor Statistics will also be delayed.
This gap leaves policymakers and analysts relying on private and regional data sources like those from the Chicago Fed and Challenger, raising questions about the clarity and reliability of labor market assessments in the weeks ahead.
Fed Caught Between Uncertainty and Deterioration
As interest rate decisions loom, the Federal Reserve faces a growing challenge: assessing labor market health without its usual suite of government-issued data. While the unemployment rate remains relatively low, the downward trend in hiring and high volume of planned job cuts could influence the Fed’s stance on future rate moves.
With private hiring at its weakest in over a decade and unemployment slowly edging higher, concerns are mounting that the labor market may be less resilient than it appears on the surface.
