With two consecutive Bureau of Labor Statistics employment reports missing, investors have turned to private-sector data and corporate announcements for guidance. The picture that has emerged thus far confirms fears: (1) the weakening trend in the labour market over the past year has been gathering momentum, and (2) this trend may persist longer than anticipated. Against this weakening economic backdrop, however, the Federal Reserve has held back on the pace of rate cuts, having cut rates only twice in the later part of 2025, citing concerns that tariff-related cost pass-through could still push inflation higher.
We expect to see more reports reinforcing the weakening trend in economic fundamentals, deepening the cautious outlook we have maintained since the start of the year.
October Layoffs
Source: Challenger, Gray & Christmas, Bloomberg, as of 31 October 2025.
Outplacement firm Challenger, Gray & Christmas shared concerning news on the pace of job cuts in October – the highest number of October layoffs since 2003, with technology and warehousing jobs leading the cuts.
Jobs added
Source: Revelio Public Labor Statistics, as of 31 October 2025.
The Revelio Labs job report, aggregating public and private sector jobs, has shown a falling trend in overall payroll employment, with the public sector being the larger drag.
Recent job layoff announcements from major employers across widespread industries —including Amazon, UPS, and IBM—underscore the fragility of US consumer resilience. With hiring stagnating and layoffs accelerating, labour market deterioration appears entrenched.
For those still employed, wage growth is slowing, particularly among job changers—a key segment that typically drives income gains during expansions. This adds to the broader loss of momentum in household purchasing power.
Source: ADP research, Bloomberg. As of 31 October 2025.
In the meantime, consistent with our views earlier in 2025, inflation has remained subdued, not accelerating as many had feared. One of the largest components of inflation—shelter costs—has continued to trend lower, help to anchor overall price levels at manageable rates. As the year draws to a close, we believe the strain on household finances has yet to fully surface, particularly when viewed through headline consumer spending data. One reason is that an increasing share of spending is driven by the wealthiest households. The affluent are shouldering an even greater proportion of U.S. consumption compared to prior years, masking underlying weakness among lower-income segments.
No doubt, the Federal Reserve’s recent rate cuts reflect a heightened focus on weaker labour market dynamics. However, beyond just “softening employment numbers,” a holistic view of the data points to mounting stress on lower- to middle-class consumers, who represent the largest part of the US population and rely on steady paychecks and sustainable employment. As such, the weakness lurking in the real economy is graver than data alone portrays.
We watch the days ahead for potential market weakness and volatility, and remind ourselves of the need to remain disciplined in our portfolios—staying selective, focused on quality, and cautious in stretched areas of the market.
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