U.S. economy added 818,000 fewer jobs than originally estimated
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Workers at a restaurant at Grand Central Market in Los Angeles, Calif. last year. Photo: Eric Thayer/Bloomberg via Getty Images
New data released on Wednesday pointed to a labor market that is weaker than initially thought: There were 818,000 fewer jobs added last year through early 2024, the Labor Department said.
Why it matters: The revisions are the first step in an annual process that updates jobs data based on more complete information. This year, they are the largest since 2009 and reveal a labor market that has cooled more drastically than previously known.
The big picture: The government compiles the monthly jobs report based on survey data. Then, it will update that data with a lag based on information from unemployment insurance tax records filed by each state.
- The government will do one more round of revisions, due out early next year, before the official jobs data is updated.
Between the lines: The new data doesn't suggest the labor market fell off a cliff. Instead, the monthly job gains look less impressive than the real-time data indicated.
- With the new revisions in hand, the economy on average added 174,000 jobs each month in the 12 months through March—not the 242,000 originally reported.
What we're watching: There were already signs the labor market was cooling. The unemployment rate rose to 4.3% in July — the highest in three years.
- Federal Reserve officials have said they are more squarely focused on labor market weakness, now that inflation has receded notably.
- Financial markets had already expected the Fed to cut interest rates by a quarter-percentage point at its next policy meeting in September. It would be the central bank's first rate cut since the onset of the pandemic since 2020.
- Fed chair Jerome Powell will give a closely-watched speech in Jackson Hole, Wy. on Friday that will include an update on the economic outlook.
Zoom in: The biggest employment markdowns were in the professional and business sector, which added 358,000 fewer jobs in the 12 months through March than initially reported. That sector includes a range of white collar office jobs.
- Manufacturing added 115,000 fewer jobs in that time period; trade and leisure and hospitality also saw job gains revised lower.
- Transportation and warehousing, private education and health, government and a catch-all category for other service sector jobs are among the sectors that added more jobs than previously thought.
What they're saying: "Cast in the light of the weaker pace of hiring and the increases in the unemployment rate since April, the sharp downward revisions paint a much softer picture of the state of the labor market in 2024," Nationwide economist Ben Ayers wrote in a note.
