The U. S. economy created 818,000 fewer jobs than initially announced between April 2023 and March 2024.
That’s according to a review of data from the Bureau of Labor Statistics, which periodically reviews labor expansion data in its quarterly employment and wage census.
The task revision is within the mid-range of Goldman Sachs’ estimate of $600,000 to $1 million, and represents the largest downward revision since 2009, when the BLS revised the task expansion downward to 824,000 tasks.
This means that the U. S. economy added 2. 1 million new jobs between April 2023 and March 2024, less than the 2. 9 million jobs initially announced, and that the average monthly payroll accumulation during that period was closer to 178,000 instead of 246,000. announced, ING Economics said.
“This means that labor market dynamics are losing ground, due to a weaker position than previously thought,” said James Knightley, an economist at ING.
US stocks rose first after the news broke shortly after 10:30 a. m. ET, perhaps due to the prospect that creating fewer jobs in the economy would push the Federal Reserve to be more dovish and cut interest rates faster.
Even if the downward revision to employment is significant, Wall Street is necessarily worried about it.
“While this figure is shocking, the expansion of the task remains positive. If in the field of September rate cuts, this knowledge largely seals the agreement on what the Federal Reserve needed to reduce rates,” he said Jamie Cox, managing partner of Harris Financial Group, in an email.
Yardeni Research said the downward revision in tasks is another sign that the tasks market is normalizing toward its pre-pandemic trends, when on average about 175,000 tasks were added to the economy each month.
In a recent note, Yardeni Research noted that immigrants were excluded from the BLS report on which the knowledge reviews are based. This is because immigration trends have contributed to the expansion of the hard labor market in recent years.
“We have found that immigrants and newcomers apply for (or are rarely eligible) for this insurance,” Yardeni Research said of unemployment insurance, on which the report is based.
“This means payrolls are likely higher than the QCEW suggests,” Yardeni Research said.
This insight is also “old news,” Yardeni Research added, and employment insight since March has been constructive despite a setback in July.
“We’ve been aware for several months and expect the August wage report to bounce back after Beryl depressed July knowledge,” Yardeni Research said, referring to Hurricane Beryl, which hit Texas with flooding and power outages.
Finally, the downward revision of employment expansion may simply translate into an upward revision of employee productivity, which would strengthen the Federal Reserve’s resolve to cut interest rates.
“This may simply mean that productivity is being revised upwards,” said Olivia Cross, an economist at Capital Economics. “In any case, a slowdown in activity or a stronger expansion in productivity suggests that the Federal Reserve has more reasons to start easing policy in September. “
And higher employee productivity could, in the end, be a boon for stocks through 2030, Yardeni Research said.
“Given the strength of the economy over the past two years, a reduction in payrolls would also be our Roaring 20s thesis by expanding the measure of employee productivity,” Yardeni Research said.
Correction: August 21, 2024: An earlier edition of this article incorrectly stated the time period of employment data. The revisions were for the April 2023 to March 2024 era, the March 2023 to 2024 era.
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