USA (Washington Insider Magazine) – New Bureau of Labor Statistics data reveals a major downward revision in U.S. job growth, with 818,000 fewer jobs added over the past year than initially reported. The updated figures show an average monthly increase of 174,000 jobs, significantly lower than the previously estimated 242,000. This adjustment, marking the largest revision since 2009, highlights a weaker-than-expected labor market.
Based on state unemployment tax records, the revised figures reveal significant reductions in several sectors. Professional and business services saw the largest decrease, with nearly 358,000 fewer jobs than initially reported. Manufacturing, leisure hospitality, and information sectors also experienced considerable downward revisions.
Federal Reserve and Economic Implications
According to Axios, Federal Reserve officials closely monitor these developments as the labor market shows signs of cooling. The July jobs report, which revealed only 114,000 new jobs and an increase in the unemployment rate to 4.3%, raised concerns about the labor market’s health. This rise in unemployment triggered the Sahm rule, suggesting a potential recession if the three-month average jobless rate exceeds the 12-month low by at least 0.5 percentage points. The current average of 4.13% is 0.63 percentage points higher than the July 2023 low.
Market Expectations and Federal Reserve Response
The market anticipates the Federal Reserve will reduce interest rates at its September meeting, with about 67% of investors expecting a 25-basis point cut and 32.5% anticipating a larger 50-basis point reduction. This potential rate cut would mark the Fed’s first reduction since the pandemic began.
This initial revision is part of an annual process that updates job data based on more complete information, with another round of revisions expected in early 2025. The updated numbers suggest a slower pace of job creation than initially reported but do not indicate a complete collapse of the labor market. The October jobs report is anticipated to include further updates to job figures for August and September.
The revised data underscores the importance of reviewing and refining economic statistics as more information becomes available. The significant adjustments to job growth figures highlight the complexities of labor market data and its impact on economic assessments.
