Fed cut off from ADP payroll data. The payroll processor ADP (NASDAQ:ADP) has suspended the Fed’s access to detailed private payroll records. That reduces the central bank’s real time view of the job market just as the government shutdown has choked off most official economic releases. Tomorrow’s September CPI is now the only timely federal data before next week’s policy meeting. This matters now for markets in the near term and for how policymakers gather signals over the long term.

What happened and why it matters

ADP has for years given Federal Reserve staff access to a more granular payroll measure than its public releases. That access helped Fed officials read short term turns in employment that the monthly government reports can miss. ADP handles roughly 20 percent of private payrolls, which made the data a useful complement to Bureau of Labor Statistics work.

ADP’s decision to suspend the relationship highlights a key weakness of private sector data. Private firms have other incentives. They serve clients and protect relationships. That can lead them to change how they share or package information at short notice. The government collects data on a different mandate. Its bureaus are designed to produce consistent, comparable series over long stretches of time.

The timing could not be worse for policymakers. The partial government shutdown has idled many statisticians. About 100 employees at the Bureau of Labor Statistics were recalled to compile the September Consumer Price Index report. Outside of that exception the normal stream of federal statistics has been thin. With ADP cut off, the Fed will have fewer independent checks on labor market strength in the days before its meeting.

How markets view the vacuum before CPI

Market participants were already moving to price in more importance for the CPI release. When regular government reports are missing traders and risk managers rely more heavily on the few official datapoints that remain. That tends to increase volatility around each release because each datapoint carries outsized informational weight.

Private indicators from banks and card networks have tried to fill gaps. Bank of America (NYSE:BAC), Visa (NYSE:V) and Mastercard (NYSE:MA) all publish spending and flows that often arrive sooner than government numbers. Still, those series have sample biases. A payroll processor misses government jobs and a card network will over-represent the customers it serves. The result is that private series help form a picture but rarely replace the broad coverage of federal statistics.

Traders will therefore watch tomorrow’s CPI not only for the headline inflation reading but also for signs that the labor market is cooling or holding firm. Fed officials have cited ADP-based weekly payroll measures in speeches. With that input gone, the official CPI reading gains prominence as a direct input into policy deliberations when they convene next week.

The CPI report and what the numbers say

Economists polled ahead of the release expect the Consumer Price Index to show a 3.1 percent rise in the 12 months through September. That compares with a 2.9 percent year over year increase in August. Core CPI, which excludes food and energy, is projected to hold at 3.1 percent on the year.

On a monthly basis the forecasts call for headline CPI up 0.4 percent and core CPI up 0.3 percent. Those monthly rates would match August’s month over month gains. If the report prints a touch hotter than expected it will sharpen discussion about how persistent price pressures remain. If it prints cooler markets will weigh whether the labor market and demand are softening in ways that private data had suggested.

There is also a direct near term implication for Social Security recipients. By law the September CPI is used to calculate the January cost of living adjustment. The Senior Citizens League projects a 2.7 percent COLA for January 2026 based on expected readings. That linkage is one reason the BLS employees were called back despite the shutdown.

Market positioning and what to watch in the trading session

With so few official data points available all week investors will parse market moves carefully. Equity sectors with strong ties to consumer spending could react to a hotter CPI. Financial stocks may move on shifting interest rate expectations. Treasury yields could retrace moves quickly if the CPI surprises in either direction because traders have fewer alternate signals to anchor decisions.

Currency markets often respond when inflation prints differently than priced expectations. A hotter reading could support the dollar if markets interpret it as evidence that policy will stay restrictive longer. A cooler reading could ease that pressure and give risk assets some relief. Options and futures markets typically widen implied volatility under such concentrated information risk.

Institutional desks and risk managers will also monitor subsequent Fed commentary closely. Policymakers have already signaled a hunger for multiple data inputs. As Chicago Fed president Austan Goolsbee said recently, officials sniff everything that lands on the floor to see if it is food. With fewer inputs available, each official statement may be read for clues about how the committee interprets the limited evidence.

Longer term takeaways for data and policy

The ADP episode underscores the broader trend of growing private sector data production. Firms are investing heavily in analytics and in providing timely indicators. That trend is likely to continue because private data can be fast and granular. In the long run the Fed and other policymaking institutions will still need comprehensive official series that are consistent over time.

Private and public data will likely remain complementary. Private series can trigger early alerts. Official series provide the comprehensive baseline. Policymakers and market participants will need to keep both in view but also be mindful of the limits each source carries. The current shortage of federal releases is a reminder of why robust public statistics matter for markets, for households that rely on benefit adjustments, and for the functioning of policy debates.

Tomorrow’s CPI will offer the next clear window into inflation and consumer prices. With the Fed meeting one week away and ADP no longer providing its private feed to the central bank, traders and officials will scrutinize the report for evidence of persistence or cooling. The result will shape commentary and positioning through the rest of the week and into next week’s deliberations.