U.S. added 818,000 fewer jobs than previously expected from March 2023 to March 2024

Although some analysts believe the negative revisions aren’t as terrible as they may seem on the surface, the government warned on Wednesday that prior data significantly exaggerated the recent labor market rebound. This is a potentially concerning indicator as slowing job growth rattles confidence in the economy. About half an hour after the planned 10 a.m. EDT announcement, the Bureau of Labor Statistics said that the United States added 818,000 fewer jobs than projected between March 2023 and March 2024.

This lowers the average monthly growth during that time from roughly 242,000 to approximately 174,000, and reduces the 12-month total employment growth (not includes farm jobs) from 2.9 million to about 2.1 million. The revelation was well received by investors, as the S&P 500 increased by roughly 0.3% soon after the changes were made public, increasing its daily gain to 0.5% and reaching its highest level since July 16.

The most often used indicator of the total employment situation in the United States, the government’s monthly nonfarm payrolls statistics, was updated as part of the regularly scheduled first benchmark adjustment. The government’s recalibration to more accurate quarterly jobless claim data rather than the monthly employer surveys that are utilized for initial monthly estimates was the cause of the significant changes. On Wednesday, analysts were expecting a significant downward adjustment; Goldman Sachs economists were predicting between 600,000 and 1 million. Significant changes have been the norm in previous years. According to the government, in August of last year it overestimated job growth by 306,000 for the 12-month period ending in March 2023 and in August of this year it underestimated job growth by 462,000 for the same period ending in March 2022. The U.S. added an average of 154,000 jobs per month from April to July, but the growth in nonfarm payrolls slowed. As a result, the unemployment rate increased to 4.3%, the highest level since October 2021. This downward revision coincided with these developments. A U.S. recession was momentarily feared following the dismal nonfarm payrolls report on August 2, but more recent data has given investors hope for the future of the economy.

Some economists believe that there isn’t much cause for concern regarding the headline revision number. The new forecast likely overstated the error by 400,000 to 600,000, according to Goldman economist Walker, who wrote ahead of the Labor Department report that the 818,000 downward revision is likely “erroneous” and “misleading.” This was largely because the methodology mostly excluded unauthorized immigrants, a group that strongly contributes to overall job growth. Ed Yardeni, the founder of Yardeni Research, stated, “We’re not sweating this report,” adding that the correction is essentially “old news” because it uses employment data from several months ago.