Recent delays in the release of government labor market data have prompted researchers to use alternative methods for assessing labor market conditions. Thirteen out of 24 variables typically used in the Kansas City Federal Reserve’s Labor Market Conditions Indicators (LMCI) come from the Bureau of Labor Statistics’ Employment Situation Report, which has faced recent publication delays. However, with 11 other up-to-date data series still available, a restricted version of the LMCI has been constructed to provide insight into current labor market trends.
According to the Federal Reserve Bank of Kansas City, both the official and restricted versions of the LMCI’s level of activity indicator have shown similar movements over time, with a strong correlation before the pandemic and resumed alignment after 2021. Both indicators have recently declined at comparable rates, approaching their historical averages.
The restricted momentum indicator, which omits payroll growth and unemployment rate data, also closely tracks its unrestricted counterpart. While it exhibited smaller fluctuations during the pandemic, it responded more strongly to increased layoffs earlier this year. Both momentum measures remain below zero but are recovering from earlier dips.
In September 2025, the restricted level of activity indicator fell from 0.06 to zero, indicating activity is now at its historical average. The restricted momentum indicator increased by 0.18 points, moving from −0.88 to −0.70. These changes are consistent with recent month-to-month patterns in both official and restricted indicators. The readings suggest that while labor market activity is cooling at a gradual pace observed over the past two years, it remains near historical norms.
The restricted LMCI has also been used to forecast key labor market metrics such as unemployment and payroll growth. A simple forecasting model based on the restricted LMCI estimates that the unemployment rate in September was 4.4 percent, slightly higher than August’s official rate of 4.3 percent.
Additionally, forecasts using the restricted LMCI indicate that average monthly job gains from July to September were about 60,000—an increase compared to the official three-month average of 29,000 jobs added between June and August but within the range suggested by other alternative estimates such as those from ADP and Revelio Labs.
The authors conclude: “In summary, when official data sources are delayed or unavailable, the LMCI can still provide a timely measure of the labor market’s health. Additionally, this data-restricted LMCI can be used to forecast key labor market measures such as the unemployment rate or payroll growth. Accordingly, we calculate the LMCI for September and find that the restricted version suggests little change in the labor market from August to September. While official statistics remain vital data sources for researchers, the LMCI’s long history and wide variety of inputs may make it a useful alternative for policymakers facing data delays.”
José Mustre-del-Río is an assistant vice president and economist at the bank; Johnson Oliyide is a research associate; Emily Pollard is an associate economist at the bank. They note: “The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.”
