By William Watts
Alternative data and other resources are in the spotlight
Job postings and other data points are gleaned by alternative-data firms.
It’s no-jobs Friday, thanks to the federal government shutdown robbing investors of what’s often the most closely watched piece of monthly U.S. economic data. But there are alternatives.
Indeed, a rapidly expanding industry has grown up around so-called alternative data sources, an array of information gleaned from the web, satellites and even consumers’ wallets.
When it comes to the jobs picture, investors can tap data provided by companies like RavenPack, LinkUp and Revelio Labs that track real-time job postings, said Yin Luo, senior analyst at Wolfe Research. RavenPack’s job-analytics data is useful in building “nowcasts” that aim to predict data points like nonfarm payrolls and the unemployment rate, Luo said in an email.
Typically, professional investors don’t use a single dataset but combine alternative datasets and official readings. Alternative datasets aren’t seen as necessarily better than official data, but they allow investors to build a diversified set of uncorrelated inputs.
That’s all well and good, but what about investors with fewer resources? They’re not flying completely blind, as MarketWatch’s Jeffry Bartash notes. Public and private surveys have affirmed that businesses are no longer hiring aggressively and that job creation has slowed sharply since the spring.
Check out: Government shutdown means Fed lacks crucial data as it considers rate cuts
Investors have weighed data the past week from payrolls processor ADP Inc. (ADP), which showed private-sector payrolls contracted for a second month in a row. While investors didn’t see weekly jobless-claims data on Thursday – a valuable real-time insight into the state of the labor market – more attention was thrown on outplacement firm Challenger, Gray & Christmas’s monthly layoffs report, which showed the pace of layoffs slowed in September but that hiring plans remained the weakest since 2009. That’s an indication that jobless claims may have fell, said Mike Dickson, head of research at Horizon, in an email.
On Friday, the labor component of the Institute for Supply Management’s September services gauge rose to 47.2% from 46.5% the previous month, but was still below the 50% line that marks the difference between growth and expansion. Moreover, September was the fourth month in a row that the employment index printed in contractionary territory, noted Vail Hartman, rates strategist at BMO Capital Markets, in a note.
See: The jobs sector employing the most Americans has been shrinking for months – making the case for another Fed rate cut
And there are other readily available sources. In a Friday note, Nick Colas, co-founder of DataTrek Research, highlighted his weekly look at Google searches for the term “unemployment” in the absence of the weekly claims data.
“This measures broad social interest in joblessness and especially the process for applying for unemployment benefits,” he wrote.
Colas pointed to the chart below, which uses indexed search-volume data running back to 2022 to show that search volumes are at or near the lowest in more than three years.
“Google search volumes for ‘unemployment’ have been more reliable than the initial-claims data in recent weeks, in that it has portrayed a stable U.S. labor market while the official data seesawed quite dramatically,” he wrote. “This dataset continues to suggest little in the way of incremental joblessness, a good sign for the U.S. economy.”
And some government data, such as the Energy Information Administration’s reading on weekly gasoline demand, are still being released despite the shutdown, he noted. That showed that over the last one and four weeks, gasoline demand was flat and down 0.5%, respectively, from the year-ago period, he said – “better than much of the last three months but still not indicative of stronger discretionary spending.”
Following the start of the U.S. government shutdown, the Energy Information Administration released its Weekly Petroleum Status Report on Wednesday morning as usual, which came as a surprise to some. EIA spokesman Chris Higginbotham told MarketWatch that the “guidance that came from the Energy Department is that the nature of funding allows the department to operate for a time following a lapse in funding.”
In a statement, the EIA said its website would continue to be updated, and publications would continue to be released according to established schedules “until further notice.”
Meanwhile, major stock-market indexes closed at records Thursday, with the Dow Jones Industrial Average DJIA advancing another 300 points, or 0.6%, on Friday, while the S&P 500 SPX traded near unchanged and the Nasdaq Composite COMP fell 0.4%.
“The lack of government data was not an impediment for bulls, as the burden of proof for macro or market weakness is clearly on the bears,” said Mark Hackett, chief market strategist at Nationwide, in a Friday note.
“As we enter the seasonally strong fourth quarter, the convergence of technical tailwinds, a resilient macro picture and a developing cascade of tailwinds present a strong backdrop for equities,” he wrote.
-William Watts
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10-03-25 1429ET
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