The U.S. economy created 818,000 fewer jobs than originally reported in the 12-month period ending March 2024, the Labor Department reported Wednesday.
As part of its preliminary annual benchmark revisions to nonfarm employment numbers, the Bureau of Labor Statistics said actual job growth between April 2023 and March of this year was nearly 30% lower than the 2.9 million originally reported.
The -0.5% revision to the total number of employed is the largest since 2009. The figures are routinely revised each month, but the BLS makes a more comprehensive revision each year when it receives the results of the quarterly employment and wage count.
Wall Street had been waiting for the revision of the figures because many economists had expected a significant reduction in the originally reported figures.
Even with the revisions, more than 2 million new jobs were created during that period. However, the report could be seen as an indication that the labor market is not as strong as the previous BLS report suggested. This, in turn, could give the Federal Reserve further impetus to cut 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 highlight both sides of the dual mandate, and investors should expect the Fed to prepare markets for a rate cut at the September meeting.”
At the sector level, the largest downward revision occurred in professional and business services, where job growth was 358,000 lower. Other sectors with downward revisions were leisure and hospitality (-150,000), manufacturing (-115,000) and trade, transportation and utilities (-104,000).
Within the trade category, retail sales fell by 129,000.
There were upward revisions in some sectors, including private education and health services (87,000), transport and storage (56,400) and other services (21,000).
The number of public jobs changed little after the revision; only 1,000 jobs were created.
As of July, there were a total of 158.7 million nonfarm jobs, up 1.6% from the same month in 2023. However, there are concerns that the labor market is starting to weaken, as the rise in the unemployment rate to 4.3% represents a 0.8 percentage point increase from the 12-month low and triggers a historically accurate measure known as the “Sahm rule” that indicates an economy in recession.
However, the increase in the unemployment rate is due more to the number of people returning to work than to a significant increase in layoffs.
Federal Reserve officials are nonetheless closely monitoring the labor market situation 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 decision speech at the Fed's annual meeting in Jackson Hole, Wyoming, on Friday that could lay the groundwork for easier monetary policy in the future.
Comments are closed.