By Jason Lange
WASHINGTON (Reuters) - A partial shutdown of the U.S. government began to delay the release of data on the world's largest economy on Tuesday, leaving policymakers and investors in a fog.
From crop yields to unemployment figures, many of the nation's most closely watched data will not be published during the shutdown that began at midnight.
The Bureau of Economic Analysis, which publishes data on economic growth, shut down its website overnight and failed to issue a report on construction spending that was supposed to be released at 10 a.m.
The Bureau of Labor Statistics, which was scheduled to publish the nation's employment report for September on Friday, said it would not issue anything until government operations resumed.
"During the shutdown period BLS will not collect data, issue reports, or respond to public inquiries," the agency said. "Updates to the site will start again when the federal government resumes operations. Revised schedules will be issued as they become available."
Congress failed to reach a deal overnight to fund whole swaths of government, and federal offices began shutting down early on Tuesday. The dearth of data will make it harder for policymakers and investors to gauge the health of the U.S. economy and the supply of commodities into global markets.
The monthly jobs report, which provides the nation's unemployment rate and measures hiring by employers, regularly sets the tone for financial markets worldwide as investors use it to place bets on the direction of U.S. monetary policy.
Without it, they will rely more on an employment report produced by payrolls processor ADP, which is due on Wednesday. The ADP report has a spotty record in predicting job growth compared to the government's more comprehensive tally.
"This is going to push the ADP report more into the spotlight," said Mike Cullinane, head of Treasuries trading at D.A. Davidson in St. Petersburg, Florida. "It might to be the only employment report we are going to get this month."
CAUTION IN THE FOG
It's also possible a prolonged shutdown could hit traders in their pocketbooks as investors grow more cautious about making bets on the direction of the economy, which could translate into fewer commissions for brokers.
"Wall Street clients move money around and buy and sell securities when they change their view, and without the government economic reports, there is no reason to change your view," said Chris Rupkey, managing director and chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.
In the wake of the failure by Democrats and Republicans on Capitol Hill to come to terms over the federal budget, the Department of Agriculture also closed its main websites and stopped issuing data for dozens of reports that allow investors and businesses to track crops and livestock.
The department released a report on daily grain exports early on Tuesday, but that will likely be its last until the government reopens. The United States is the world's largest exporter of agricultural goods.
The department's next monthly crop report due on October 11 was expected to be a major marker, and an extended shutdown could frustrate traders counting on that report to provide more clarity over the harvest now underway.
Some government data will continue to flow, including a weekly report on claims for jobless aid and, at least for the next week or so, data on energy output and prices. The Department of Energy's statistical agency said it will not immediately run out of funds for its operations.
The Treasury Department will continue to carry out debt auctions, and it will also keep releasing international capital flows and other financial market data.
Like ADP, other privately produced economic figures will also continue to be published, such as the data issued on Tuesday by the Institute for Supply Management that showed factory activity picking up in September.
It is not clear how quickly the government could gear up to produce any of the reports that are being delayed, or whether a swift end to the shutdown might still allow the monthly employment report to come out on Friday as scheduled.
Moreover, the shutdown will stop much of the survey work done by the government to produce future reports. If the shutdown extends into next week, for example, the BLS would likely not be able to sample as many households as it usually does to calculate the national unemployment rate.
That is what happened the last time the government shut down between December 1995 and January 1996. Even after data began flowing again, the BLS did not immediately include revisions to prior months' data for job creation.
(Reporting by Jason Lange; Additional reporting by Richard Leong and Ellen Freilich in New York; Editing by Andrea Ricci and Chizu Nomiyama)