The U.S. labor market recovery was weaker than initially believed, according to new data released by the government on Wednesday. The Bureau of Labor Statistics revealed that from March 2023 to March 2024, the U.S. added 818,000 fewer jobs than previously estimated. This adjustment reduces total job growth for the period from 2.9 million to approximately 2.1 million, lowering the average monthly job increase from 242,000 to 174,000.
Despite the downward revision, the stock market responded positively, with the S&P 500 rising 0.3% shortly after the news, extending its daily gain to 0.5%.
Context:
The revised figures are part of the Bureau of Labor Statistics’ first benchmark revision to its monthly nonfarm payrolls data, a key measure of U.S. employment. The significant reduction in job growth is due to the government’s switch to more accurate quarterly unemployment claim data instead of relying on monthly employer surveys. Economists had anticipated a substantial downward revision, with predictions ranging from 600,000 to 1 million fewer jobs. The new figures have raised concerns, particularly as recent trends indicate a slowdown in job growth, with an average of 154,000 jobs added per month between April and July, and the unemployment rate rising to 4.3%, the highest level since October 2021.
Expert Opinions:
However, some economists are downplaying the impact of the revision. Goldman Sachs economist Walker argued that the downward adjustment might have exaggerated the error by 400,000 to 600,000 due to the exclusion of unauthorized immigrants, who significantly contribute to job growth. Ed Yardeni, founder of Yardeni Research, called the revision “old news,” noting that it pertains to employment data from several months ago.
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