The US economy added 818,000 fewer jobs than originally reported in the 12-month period through March 2024, the Labor Department said on Wednesday.
As part of his preliminary annual benchmark reviews; As for nonfarm payrolls numbers, the Bureau of Labor Statistics said actual job growth was nearly 30 percent less than the 2.9 million originally reported from April 2023 to March of this year.
The -0.5% overall wage level revision is the largest since 2009. The numbers are revised regularly each month, but the BLS makes a broader revision each year when it receives the results of the Quarterly Census of Employment and Wages.
Wall Street awaited the revised numbers, with many economists expecting a significant reduction in the initially reported figures.
Even with the revisions, job creation in the period totaled more than 2 million, but the report could be seen as an indication that the labor market is not as strong as the previous BLS report had shown it to be. This in turn could give further impetus to the Federal Reserve to start cutting interest rates.
“The labor market appears weaker than initially reported,” said Jeffrey Roach, chief economist at LPL Financial. “A deteriorating labor market will allow the Fed to emphasize both sides of the dual mandate, and investors should expect the Fed to prime markets for a cut at the September meeting.”
At the industry level, the largest downward revision was in professional and business services, where job growth was 358,000 fewer. Other sectors revised lower included leisure and hospitality (-150,000), manufacturing (-115,000) and trade, transport and utilities (-104,000).
In the trade category, retail trade numbers fell by 129,000.
Some sectors saw upward revisions, including private education and health services (87,000), transport and storage (56,400) and other services (21,000).
Government jobs were little changed after the revisions, gaining just 1,000.
Nonfarm payrolls totaled 158.7 million through July, up 1.6% from the same month in 2023. However, there are concerns that the labor market is starting to weaken, with the unemployment rate rising to 4.3 % representing a 0.8 percentage point gain from the 12-month low and triggering a historically accurate measure known as the “Sahm Rule” that indicates an economy in recession.
However, much of the increase in the unemployment rate has been attributed to an increase in people returning to the workforce rather than a strong increase in layoffs.
“This preliminary estimate does not change the fact that the jobs recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending and record-setting small business,” said White House Economist Jared Bernstein.
Sure enough, Goldman Sachs economists said later Wednesday that they believe the BLS may have overstated the revisions by as much as half a million. The company said that undocumented immigrants who are now not in the unemployment system but were originally registered as employed accounted for some of the differences, along with a general tendency to overestimate the initial revision.
But Federal Reserve officials are watching the jobs situation closely and are expected to approve their first rate cut in four years at their next meeting in September. Chairman Jerome Powell will deliver a much-anticipated policy speech on Friday at the Fed’s annual meeting in Jackson Hole, Wyoming, which could set the stage for easier monetary policy going forward.
