U.S. employers added far fewer jobs than originally reported in the year through March, the Labor Department said Wednesday, underscoring the Federal Reserve’s growing concerns about the health of the labor market as it prepares to begin cutting interest rates in September.
The department’s review of total payroll employment for the period from April 2023 to March 2024 was down 818,000.
The sharp reduction is the first of two annual “baseline” reviews the department conducts to gather more accurate data that is only available in the months following the publication of the monthly payroll report.
If the figure is maintained until the final revision in February, it would be the biggest downward revision since the reduction in employment by 902 thousand people in March 2009.
It also echoes the view of some economists that data collection problems have led to the strong growth in jobs being systematically overstated, while the recent rise in unemployment may be exaggerating the extent of the cooling.
The revision represented an overall downward change of around 0.5 percent.
Private employment growth was revised down by 818,000 jobs, or 0.6 percent below the department’s previous estimate. Public employment remained basically unchanged.
The professional and business services category saw the largest job decline, losing 358,000, or 1.6 percent, from the previous forecast, followed by leisure and hospitality, with 150,000 jobs, down 0.9 percent. The hard-pressed manufacturing sector saw a reduction of 115,000 jobs, also down 0.9 percent.
The few sectors that experienced upward revisions were transportation and storage, with 56,400 more jobs, or 0.9 percent; private education and health services, with 87,000 more jobs, or 0.3 percent; and public services, with 1,700 more jobs, or 0.3 percent.
Fed Concerns
Federal Reserve policymakers may take into account signs that the labor market is weaker than previously thought when considering the pace of interest rate cuts following the initial cut in borrowing costs expected at their Sept. 17-18 meeting.
The central bank has kept its benchmark overnight interest rate at the current range of 5.25-5.50 percent for more than a year, having raised it by 5.25 points in 2022 and 2023 to quell high inflation.
But with inflation now within striking distance of the Fed’s 2 percent target, attention has turned to ensuring that the lagged effects of a prolonged period of high borrowing costs do not derail a labor market that had been seen cooling gradually.
Weaker-than-expected July payrolls data raised concerns the Fed had waited too long to start cutting rates as the unemployment rate rose to a post-pandemic high of 4.3 percent.
However, other data released since then, such as weekly jobless claims, suggest that the labor market is still in an orderly slowdown.
The Department of Labor will issue its final baseline revision for March 2024 employment levels in February 2025, when it releases the January 2025 employment report. Final revisions are typically not far removed from the preliminary revision.
In its second baseline review of the year, released last February, the department revised down its estimate for total employment in March 2023 by 40,000 people.
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– 2024-08-29 00:27:51
