The red hot US job market was not as blistering as originally reported in the year to March, after the Labor Department on Wednesday cut its estimate of total payrolls for this month by 306,000 and private employment by even more.
The cut, the first of two annual “benchmark” reviews by the department as it incorporates more data to give as accurate a reading as possible of the U.S. job situation, suggests that government and private employers had about 155, 17 million workers on their books. in March, down from about 155.47 million as previously reported. The revision represented a total downward change of about 0.2%.
Private employment growth was revised down by 358,000, or 0.3% below the department’s previous estimate. Public employment was revised up by 52,000, or 0.2%.
Nancy Vanden Houten, US head of Oxford Economics, said “the downward revision only suggests slightly cooler labor market conditions.”
According to its estimate, it reduces average monthly job growth from April 2022 to the last report in July 2023 to 313,000, from an average of 332,000 before the revision. That’s still nearly double the monthly growth rate that prevailed in the decade before the coronavirus pandemic.
The transportation and warehousing sector, which has grown since the pandemic, saw the largest downward revision, with a total of 146,400 jobs, or about 2.2%. It was followed by professional services, with a cut of 116,000, or 0.5%, and private education and health services, which fell by 85,000, or 0.3%.
In addition to government employment, sectors that experienced upward revisions included wholesale trade, which increased by 47,700, or 0.8%; financial services, an increase of 47,000, or 0.5%; retail trade, an increase of 38,200, 0.2%; and construction, an increase of 30,000, or 0.4%.
Federal Reserve officials may welcome indications that the labor market is a bit softer than previously thought as they consider whether to raise interest rates at their policy meeting on the 19th-20th of September The The central bank has raised rates by 5.25 percentage points from March 2022 until raise inflationand many officials, including Fed Chairman Jerome Powell, have said it will likely take some weakening of the labor market to return inflation to the central bank’s 2 percent target.
Vanden Houten said the review is unlikely to alter the debate too much.
“On the sidelines, Fed officials may see the downwardly revised data, along with the moderation in wage growth, as a sign that their policy decisions are having the intended effect,” he wrote in a note. “While we stress that the risks are tilted toward further interest rate hikes, recent comments from Fed officials and the minutes of the July FOMC (Federal Open Market Committee) meeting tell us that officials of the Fed will keep rates steady at the next policy meeting in September.”
The Labor Department will issue its final benchmark revision for March 2023 employment levels in February 2024, when it releases the January 2024 employment report. Final revisions are usually not far from the preliminary.
In last year’s baseline revision, published last February, the department revised its estimate of total employment in March 2022 to 568,000.