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U.S. Job Growth Sees Sizable Downward Revision
August 27, 2024
Job growth from early 2023 through the early part of this year may not have been as robust as initially reported, according to new government data.
Compared to the officially reported monthly numbers, employers might have added 818,000 fewer jobs in the period between March 2023 and March 2024, according to a recent report from the Labor Department. That would bring the average monthly job creation figures from that period to 178,000 jobs per month, rather than the current estimate of 246,000 jobs.
The revisions come as part of an annual process the Labor Department undertakes to update older payroll figures using data from state tax rolls. This process is more comprehensive, but less timely than the monthly figures, which are based on surveying employers. The latest report is only a preliminary estimate revision that will be finalized in February.
Economists had been anticipating a downward revision for the period’s figures, believing that the labor market was not quite as strong as monthly payroll figures suggest. These economists point to other data points, like the rising unemployment rate, which paint a less sanguine picture of the labor market. The unemployment rate is also based on monthly surveys, but the surveys are focused on households rather than employers.
How the Labor Department parcels out these downward revisions over the 12-month period could have implications for the Federal Reserve’s actions regarding interest rates. If the revisions are concentrated in the earlier part of the period, it suggests that the Fed may not have needed to raise rates so high. If the weakness is concentrated to the latter part of the period, and extends beyond, it could indicate the need for more aggressive cuts from the Fed on the horizon.
One silver lining for the economy is the implication that the revisions have for productivity. Achieving the level of GDP growth that the economy has, with less work than previously believed, will mean that per capita worker productivity is higher than previously estimated.
