US DATA: Chicago Fed Indicators Show Tick-Up In Unemployment Rate In Sept

The Chicago Fed's Final Labor Market Indicators report for September estimates a 4.34% unemployment rate for the month, which would be an uptick from the 4.32% unrounded in August (and also the Chicago Fed's Advance estimate). That would mark the highest unrounded unemployment rate since October 2021 (albeit in line with expectations for the September nonfarm payrolls report which will be postponed due to the federal government shutdown).

• The unemployment rate forecast includes a combination of job-finding and job  separations rates, based on real-time data. That data includes: initial and  continuing jobless claims, Google Trends unemployment topic index, Bloomberg  consensus for unemployment, Morning Consult's indices, JOLTS, the Conference  Board's labor market differential, and Indeed / ADP / Lightcast-based job  openings rates.
• Per the Chicago Fed, the model then relates changes in the flow-consistent unemployment rate (the ratio of the job separations rate to the sum of the  job finding and job separations rates) to changes in the BLS's unemployment  rate to produce a BLS unemployment rate forecast.
• Based on the real-time data above, the Chicago Fed sees layoffs and other separations at 2.10% (up from 2.09% in the advance report) and the hiring rate for unemployed workers  falling to 45.22 (was 45.61% in the advance, and 45.61% in August), combining for a higher unemployment rate.
• It reports probabilities of possible values to be published in the upcoming  Employment report: it shows a roughly one-in-four chance that the  unemployment rate will fall from 4.3%, with 28% prob of no change and ~45% of  an increase of 0.1pp or more, likely on account of the potential for the 4.34% estimated to round up to 4.4%.