The red-hot US job market was not quite as blistering as originally reported in the year through March, after the Labor Department on Wednesday lowered its estimate of total payroll employment that month by 306,000 and of private employment by even more.
The reduction, the first of two annual “benchmark” revisions conducted by the department as it takes on board more data to give as accurate as possible a reading of the US employment situation, suggests 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 what had been previously estimated by the department. Government employment was revised up by 52,000, or 0.2%.
Nancy Vanden Houten, US lead at Oxford Economics, said “the downward revision suggests only slightly cooler labor market conditions.”
By her estimate, it reduces average monthly job growth from April 2022 through the latest report for July 2023 to 313,000 from a pre-revision average of 332,000. That is still almost double the prevailing monthly growth rate in the decade prior to the coronavirus pandemic.
The transportation and warehousing sector, which has boomed since the pandemic, saw the largest downward revision, totaling 146,400 jobs, or about 2.2%. That was followed by professional services, with a cut of 116,000, or 0.5%, and private education and health services, which was lowered by 85,000, or 0.3%.
In addition to government employment, sectors that saw upward revisions included wholesale trade, up 47,700, or 0.8%; financial services, up 47,000, or 0.5%; retail trade, up 38,200, or 0.2%; and construction, up 30,000, or 0.4%.
Fed meeting
Federal Reserve officials could welcome the indication that the job market is a bit softer than previously thought as they consider whether to raise interest rates at their Sept. 19-20 policy meeting. The central bank has raised rates by 5.25 percentage points since March 2022 to beat back inflation, and many officials, including Fed Chair Jerome Powell, have said some weakening of the job market is likely to be needed in order to return inflation to the central bank’s 2% target.
Vanden Houten said the revision is unlikely to alter the debate too much.
“At the margin, Fed officials may see the downwardly revised data, alongside moderating wage growth, as a sign that their policy decisions are having the intended effect,” she wrote in a note. “While we stress that risks are tilted toward additional interest rate increases, recent comments from Fed officials and the minutes of the July FOMC (Federal Open Market Committee) meeting signal to us that Fed officials will keep rates steady at the upcoming September policy meeting.”
The Labor Department will issue its final benchmark revision for March 2023 employment levels in February 2024, when it releases the employment report for January of 2024. Final revisions are typically not far off the preliminary one.
In last year’s benchmark revision, released this past February, the department revised up its estimate for total employment in March 2022 by 568,000.
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