The U.S. Labor Department reported Wednesday that the U.S. economy created 818,000 fewer jobs in the 12 months to March 2024 than initially reported.
as part of its initial plans Annual Baseline Revision Regarding non-agricultural employment data, the U.S. Bureau of Labor Statistics said that from April 2023 to March this year, actual employment growth was nearly 30% less than the initially reported 2.9 million people.
The revision to the total employment level was -0.5%, the largest since 2009. Correction.
Wall Street has been awaiting revisions to the data, with many economists expecting the initially reported figure to be significantly lower.
Even with the revisions, more than 2 million jobs were created during the period, but the report could be seen as an indication that the labor market is not as strong as previous BLS reports have portrayed. This in turn could provide further impetus for the Fed to begin cutting interest rates.
“The labor market appears to be softer than initially reported,” said Jeffrey Roach, chief economist at LPL Financial. “A deteriorating labor market will allow the Fed to highlight both sides of its dual mandate, and investors should expect the Fed to provide market support in September.” Be ready for a rate cut at the next meeting.”
At the industry level, the largest downward revision was in the professional and business services industry, where employment growth decreased by 358,000. Other downgraded sectors include leisure and hospitality (-150,000), manufacturing (-115,000) and trade, transportation and utilities (-104,000).
Within the trade category, retail trade volume decreased by 129,000.
A few industries saw upward revisions, including private education and medical services (87,000), transportation and warehousing (56,400), and other services (21,000).
After the revision, there was little change in government jobs, with only an increase of 1,000.
As of July, the total number of non-farm jobs was 158.7 million, an increase of 1.6% from the same month in 2023. However, there are concerns that the labor market is beginning to soften, with the unemployment rate rising to 4.3%, an increase of 0.8% from the same month in 2023. The lows rose a full percentage point and triggered a historically accurate indicator known as Sam’s Rule, which indicates the economy is in recession.
However, much of the rise in unemployment is attributable to an increase in the number of people returning to the labor force rather than a clear surge in layoffs.
Still, Fed officials are keeping a close eye on the employment situation and are expected to approve the first rate cut in four years at their next meeting in September. Chairman Jerome Powell will deliver a highly anticipated policy speech on Friday at the Federal Reserve’s annual retreat in Jackson Hole, Wyoming, which could lay the groundwork for easier monetary policy in the future.
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