2024-08-21 19:37:39
The U.S. economy created 818,000 fewer jobs in the 12 months ending March 2024 than initially reported, the Labor Department reported Wednesday.
As a preliminary Annual Benchmark Revision For nonfarm payrolls, the U.S. Bureau of Labor Statistics said actual job growth from April 2023 to March of this year was nearly 30% lower than the initially reported 2.9 million.
The -0.5% revision to total employment was the largest since 2009. These data are routinely revised each month, but the Bureau of Labor Statistics makes larger revisions each year when it obtains results from its Quarterly Census of Employment and Wages.
Wall Street had been awaiting revisions, with many economists expecting a sharp drop in the initial reading. If the new data is in line with the final revisions released by the Bureau of Labor Statistics for February, it would mean monthly payroll growth of 174,000 jobs for the period, compared with an initial estimate of 242,000.
Even with the revisions, job growth for the period was still over 2 million, but the report could be seen as a sign that the labor market is not as strong as the Bureau of Labor Statistics has previously reported. That in turn could provide further impetus for the Federal Reserve to start lowering interest rates.
“The labor market appears to be weaker than initially reported,” said Jeffrey Roach, chief economist at LPL Financial. “A worsening labor market will allow the Fed to highlight its dual mandate, and investors should expect the Fed to be ready to cut interest rates at its September meeting.”
At the industry level, the largest job loss was in professional and business services, which lost 358,000 jobs. Other industries that lost jobs included leisure and hospitality (-150,000), manufacturing (-115,000), and trade, transportation, and utilities (-104,000).
Within the trade category, retail trade employment fell by 129,000.
Hiring was revised upwards in some industries, including private education and health services (87,000), transport and warehousing (56,400) and other services (21,000).
After the revision, there was little change in government posts, with just an increase of 1,000.
As of July, nonfarm payrolls totaled 158.7 million, up 1.6% from the same period in 2023. However, there are concerns that the labor market is beginning to weaken, with the unemployment rate rising to 4.3%, up 0.8 percentage points from a 12-month low and triggering a historically accurate measure, known as the “Sam’s Rule,” to indicate a recession.
However, much of the rise in the unemployment rate is attributable to an increase in the number of people returning to the labor force rather than a clear increase in layoffs.
“This preliminary estimate does not change the fact that the jobs recovery has remained historically strong, with solid job and wage gains, robust consumer spending, and record small business activity,” White House economist Jared Bernstein said in a statement.
To be sure, Goldman Sachs economists said late Wednesday they believed the BLS may have overstated the revision by as much as 500,000. The firm said undocumented immigrants who are not currently in the unemployment system but were initially listed as employed accounted for some of the discrepancy and that the initial revision was generally inflated.
Still, Fed officials are keeping a close eye on the employment situation and are expected to approve the first rate cut in four years when they next meet in September. Fed Chairman Jerome Powell is set to deliver a much-anticipated policy speech on Friday at the central bank’s annual retreat in Jackson Hole, Wyoming, which could lay the groundwork for future monetary easing.
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