The yearly shift has been expected by market watchers who believe the Fed should have lowered interest rates earlier.
The number of jobs created in the United States for the year that ended in March was cut down by 818,000 on Wednesday. This is a big reduction that confirms previous worries about a weakening economy.
Due to the adjustment, there were approximately 2.1 million more jobs generated in the United States last year than there were the year before (around 2.9 million).
The updated numbers are only revised estimations of the number of jobs that were really generated during the relevant period; they do not reflect employment losses.
“The labor market appears to have been on solid footing even after these significant downward revisions,” research analysts from Bank of America stated following the publication of the data.
The report provides more proof that a more serious economic slump in the United States may be approaching. The unemployment rate recently rose to a new post-pandemic high of 4.3%, despite the economy growing strongly in recent quarters and sometimes exceeding forecasts (the data adjustments today do not change measurements of the jobless rate). Even though hiring has essentially stopped, the percentage of American workers who are both employed and jobless and are seeking for new employment reached its highest level in a decade in July.
The early 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,” according to a statement from White House Chief Economic Adviser Jared Bernstein.
The Bureau of Labor Statistics released an update on Wednesday that was the biggest downward revision since 2009. Nevertheless, it was somewhat lower than anticipated by meteorologists, who had cautioned that the number may have reached one million. The market responded somewhat subduedly.
The jobs data covered by the period were “softer than first thought, but not worryingly so,” according to Olivia Cross, an economist with the Capital Economics research group, who made this observation in a note to clients on Wednesday. She also predicted that the report would likely result in the Federal Reserve cutting its key interest rate by 0.25% in September, as most analysts had predicted prior to Wednesday’s release.
The greatest revision in terms of absolute employment was seen in professional and business services, where there were 358,000 fewer positions than originally reported. After that, leisure and hospitality fell by 150,000.
Information-related jobs had the largest change, down by 2.3% on a percentage basis.
In addition to its regular monthly surveys, the Bureau of Labor Statistics uses state unemployment insurance tax data each year to provide a more accurate picture of the labor market.
The BLS modifications are preliminary, and in February of next year, the revisions’ scope will be revised once again.
The market watchers have been debating whether the Federal Reserve has been too sluggish to reduce rates despite indications of a slowing economy, so this year’s adjustment was much anticipated. When the Fed meets next on September 18 to discuss policy, interest rates are predicted to be lowered by 0.25%.
Research analysts at Bank of America stated that the report will “littlely impact” expectations for Fed policy, noting that prior to the adjustments, the Fed had previously expressed worries about the job market.
