The government shutdown that began Wednesday was the true main event of the week as it meant that the jobs data was not released as scheduled Friday morning. It also means that the Fed may have to make future monetary policy decisions somewhat blind as other data points may be withheld as the shutdown continues. It’s likely it will be a few more days before the government reopens.
A shutdown will likely have significant economic impacts regardless of its duration as thousands of workers will be furloughed. The federal government may also lose out on multiple sources of revenue as parks and other institutions that it runs will be closed or limited to the public. However, both parties have dug in their heels and look like they may be ready for a prolonged battle.
The ADP version of the nonfarm payroll report was released on Wednesday. It revealed that the economy shed 32,000 jobs compared to an expected gain of about 52,000. The previous month’s report was also revised downward to a loss of 3,000 jobs.
While the ADP and BLS versions of the nonfarm payroll report often differ, they generally align on the overall trajectory of the job market. Of course, this situation may be exacerbated if federal government employees are terminated instead of merely being furloughed.
On Tuesday, the JOLTS report came out and revealed that there were 7.23 million job openings in the United States, which was roughly in line with analyst expectations. The CB Consumer Confidence report also came in at 94.2, which was below the expected 96 and lower than the 97.8 posted last month.
Wednesday also featured the release of the ISM Manufacturing PMI. It came in at 49.1, which effectively matched analyst expectations. On Friday, the ISM Services PMI came in at 50 compared to an expected 52.
Despite the shutdown, the S&P 500 finished the week up by 43.93 points to close at 6,715. On Tuesday afternoon, the market made a low of 6,646 before reversing course and climbing on Wednesday and Thursday. On Friday afternoon, the index reached its weekly high of 6,749.
The Dow also closed the week higher, finishing up 572 points to close at 46,758. On Tuesday, the index made its low of the week when it dipped to 46,137. By Friday, the index broke the 47,000 threshold before reversing in the afternoon.
Finally, the Nasdaq also finished the week higher, closing up 140 points to end Friday at 24,785. As with the other two indexes, the Nasdaq made its low for the week on Tuesday and its high of the week on Friday. The weekly range was 24,529 to 24,943.
In international news, Australia decided on Tuesday morning to keep its interest rate steady at 3.6 percent. On Thursday morning, Switzerland announced that inflation had dipped by 0.2 percent over the last month. Thursday night, Japan’s central bank leader said that the country may increase interest rates if the nation’s economy continues to recover.
The coming week will have continued uncertainty as there is no indication that the government will reopen. However, if it does, unemployment claims data will be released Thursday while the nonfarm payroll numbers for September will be released on Friday. The University of Michigan will also release its inflation expectation and consumer sentiment reports on Friday regardless of what happens.