US employment falls by 818,000 jobs in latest government revision

The U.S. economy employed 818,000 fewer people than expected in March 2024, suggesting the labor market may have been cooling well before initially thought.

Revisions are an annual practice of the Bureau of Labor Statistics; the final revised figures are expected to be released early next year.

The report, released Wednesday morning, showed the largest downward revisions were in the professional and business services sector, where jobs were revised down by 358,000 over the period. The leisure and hospitality sector saw the second largest downward revision, at 150,000.

The report cuts monthly job gains in the U.S. economy during the period from 242,000 to 174,000.

“Despite this significant downward revision, this remains a very healthy growth rate in terms of monthly jobs added to the economy,” Omair Sharif, president of Inflation Insights, told Yahoo Finance.

Additionally, economists cautioned ahead of the release about how investors should interpret the numbers, given their backward-looking nature.

“The observation that the economy has created fewer jobs than initially expected [does not] “This will change the overall trends in GDP growth, stock market and wealth gains, and consumption,” Michael Reid, U.S. economist at RBC Capital Markets, wrote in a note to clients on Aug. 16.

The release comes at an important time for labor market data, as recent signs of slowdown have prompted economists to argue that the Federal Reserve's current monetary policy is too tight.

The weak July jobs report helped shift the focus to the slowing labor market. The report showed the second-lowest monthly job gains since 2020 and the highest unemployment rate, 4.3%, in nearly three years.

The July unemployment rate increase also triggered a commonly followed recession indicator, the Sahm rule, which shows that the recent rate of unemployment increase is consistent with that which typically precedes a recession.

The most recent labor market updates, namely weekly unemployment benefit filings, showed that layoffs remained relatively low, prompting economists to argue that a slowing labor market is not headed for an outright slowdown.

“It’s important to take a step back in these kinds of situations,” Marco Casiraghi, senior economist at Evercore ISI, told Yahoo Finance. “And I think the Fed will do that as well. And if you take a step back, you see the economy is slowing, but it’s still growing. The labor market is weakening, but it’s not deteriorating rapidly.”

Construction workers participate in the construction of the Signature Bridge on January 5, 2024, in Miami, Florida. (Joe Raedle/Getty Images) (Joe Raedle via Getty Images)

Fed Chairman Jerome Powell is expected to speak for the first time since the July jobs report Friday morning at the Jackson Hole symposium. Economists expect the labor market to be a key talking point.

The story continues

“We expect Powell to express somewhat more confidence in the inflation outlook and place somewhat more emphasis on downside risks to the labor market than he did at his press conference following the July FOMC meeting, in light of data released since then,” Goldman Sachs chief U.S. economist David Mericle wrote in a note previewing the event.

“A speech along these lines would be consistent with our forecast of a series of three consecutive 25bp cuts in September, November and December.”

As of Wednesday morning, markets were pricing in an interest rate cut by the end of the Fed's September meeting. At the same time, markets were pricing in about a 32% chance that the Fed would cut rates by 50 basis points.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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