The BLS revised job figures down by 818,000, revealing weaker-than-expected US job growth for 2023-2024
The US Department of Labor reported on Wednesday that the economy created 818,000 fewer jobs in the 12 months leading up to March 2024 than initially estimated, according to CNBC.
The Bureau of Labor Statistics (BLS) revised the nonfarm payroll numbers, revealing that actual job growth was almost 30 percent lower than the originally reported 2.9 million jobs from April 2023 through March 2024.
This revision, which adjusts the total payrolls level by -0.5 percent, marks the largest such change since 2009. While the BLS updates these numbers monthly, it conducts a broader revision annually based on the results of the Quarterly Census of Employment and Wages.
Economists had anticipated a significant reduction in the reported job figures, and the new numbers, if confirmed in the final revisions due in February, suggest that the average monthly job gains were 174,000 instead of the initially reported 242,000.
Despite the downward revision, over 2 million jobs were still created during the period. However, this update could indicate that the labour market is not as strong as earlier reports suggested, which may influence the Federal Reserve's decision on interest rates.
Jeffrey Roach, chief economist at LPL Financial, commented, “The labour market appears weaker than originally reported. A deteriorating labour market will allow the Fed to highlight both sides of the dual mandate, and investors should expect the Fed to prepare markets for a cut at the September meeting.”
Sector-specific revisions showed that professional and business services experienced the largest reduction, with job growth revised down by 358,000.
Other sectors affected included leisure and hospitality, which saw a decrease of 150,000 jobs; manufacturing, with a reduction of 115,000 jobs; and trade, transportation, and utilities, which were revised down by 104,000 jobs. Within the trade sector, retail trade saw a significant cut of 129,000 jobs.
Some sectors experienced upward revisions. Private education and health services saw an increase of 87,000 jobs, transportation and warehousing added 56,400 jobs, and other services gained 21,000 jobs. Government jobs remained largely unchanged, with an increase of just 1,000 jobs.
As of July, nonfarm payroll jobs totaled 158.7 million, representing a 1.6 percent increase compared to the same month in 2023.
However, there are concerns that the labour market may be weakening. The unemployment rate rose to 4.3 percent, an increase of 0.8 percentage points from its 12-month low, triggering the “Sahm Rule,” which historically signals an economy in recession.
Despite this, the rise in unemployment is attributed more to people returning to the workforce than to a surge in layoffs.
White House economist Jared Bernstein stated, “This preliminary estimate doesn’t change the fact that the jobs recovery has been and remains historically strong, delivering solid job and wage gains, strong consumer spending, and record small business creation.”
Goldman Sachs economists later suggested that the BLS may have overstated the revisions by as much as half a million jobs.
They noted that undocumented immigrants, initially counted as employed but not in the unemployment system, contributed to the discrepancy, along with a tendency for initial revisions to be overstated.
Federal Reserve officials are closely monitoring the employment situation and are expected to approve their first interest rate cut in four years at their September meeting.
Fed Chair Jerome Powell is set to give a policy speech on Friday at the Fed’s annual retreat in Jackson Hole, Wyoming, which could outline plans for future monetary easing.
