Businesses, consumers and central bank policymakers craving clarity on a U.S. labor market that has underperformed expectations for the better part of a year received a peek at September job creation from a private firm’s publication of internal indicators Tuesday.
The Carlyle Group, a global investment firm with $465 billion of assets under management and 2,300 employees spread across four continents, said U.S. employers added just 17,000 jobs in September while underlying economic growth ran at a 2.7% yearly pace.
“Corporate spending, particularly in technology and AI infrastructure, continues to power growth while household consumption ends the quarter on a high note,” said Jason Thomas, head of global research and investment strategy at Carlyle, in a press release. The company projects that U.S. business investment rose 4.8% on a three-month moving average seasonally adjusted annual rate basis.
Carlyle derived its findings from its global investment portfolio of 277 active companies, 694 real estate investments and 730,000 employees worldwide, according to the company. Thomas said the data suggest “a U.S. economy growing faster than estimates of its long-term potential.”
Carlyle also reported that private residential construction spending declined 2.5% in September compared to a year ago.
Consecutive months of weak jobs data through the end of the summer prompted the Federal Reserve to cut its benchmark interest rate by 25 basis points at its mid-September policy meeting.
That “risk management” cut signaled a policy shift to reinforce labor markets despite the pace of inflation remaining well above the Fed’s stated 2% target.
A September jobs report — the Employment Situation Summary scheduled for release Oct. 3 but delayed by the U.S. Bureau of Labor Statistics (BLS) — is the first data gap created by a shutdown of the U.S. government that commenced Oct. 1.
Like many federal offices, the BLS is temporarily shuttered until lawmakers vote to reopen the government. The Fed cannot access “locked down” data contained in scheduled releases until they are formally published, meaning no workaround exists for policymakers to get their hands on the September BLS jobs report.
Economists estimated the report would show 54,000 nonfarm payroll jobs added last month, setting Carlyle’s estimate significantly below expectations. Rapid deterioration of labor markets could hasten the pace of additional interest rate cuts, lowering borrowing costs for consumers and businesses like the Carlyle Group.
The most recent Job Openings and Labor Turnover Survey (JOLTS), published by the U.S. Census Bureau one day before the government shutdown, showed hirings and firings remained essentially flat in August as job gains stagnated.
Visibility into private payrolls for September emerged in figures published by the payroll processing company ADP on the first day of the shutdown, with private employers shedding 32,000 jobs last month, adding to concerns of weakening job creation.
With the next two-day Fed policy meeting scheduled for Oct. 28 and 29, the pace of future easing depends on month-to-month changes in labor markets, consumer prices and overall economic growth.
On the inflation side, Carlyle estimates services prices excluding shelter rose 3.3% in September, while energy prices fell 3.8% and durable goods rose 2.3%.
The seasonally adjusted consumer price index, a widely studied measure of inflation, rose in August at its fastest pace since January, with the 2.9% increase driven by rising housing and grocery costs.
Inflation as measured by the personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation, rose 0.3% from July and 2.9% year over year in August.
