U.S. employment growth over the past year has been weaker than what the federal government has reported, according to newly revised data.
Private nonagricultural payrolls were lowered by 358,000, while government payrolls were revised up by 52,000.
Preliminary benchmark revisions were broad-based, as most sectors saw lower job growth. The changes were led by transportation and warehousing (negative 146,400), professional and business services (negative 116,000), private education and health services (negative 46,000), and manufacturing (negative 43,000). The “other services” category shed 63,000 positions. Retail and wholesale trade job gains were revised higher by 38,200 and 47,700, respectively. Construction positions were also altered upward by 30,000.
Overall, the benchmark revision totaled negative 0.2 percent, the BLS noted. By comparison, the average adjustment over the past decade has been 0.1 percent, with a range of negative 0.3 percent and 0.3 percent.
Revisions have played a major part in the monthly job reports as employment gains have been revised lower every month this year. The July jobs report revised down the May and June employment gains by a combined 49,000. The U.S. economy hasn’t seen six straight months of downward revisions outside of recessions since the peak of the housing bubble in 2007.
EJ Antoni, a public finance economist at The Heritage Foundation, thinks this trend of downward revisions will continue.
“Looking forward to future monthly employment reports, whatever statistical issues have caused the consistent downward revisions seem to be persisting, so I would expect the trend to continue,” Mr. Antoni told The Epoch Times. “That makes it less important to look at the preliminary headline numbers and more important to look at revisions, including the final annual benchmark revision.”
Putting Out the Fire
The U.S. labor market has been red hot since 2021. The country recovered all of the jobs lost to the coronavirus pandemic in August 2022, the unemployment rate is at a five-decade low of 3.5 percent, and nominal wage growth (not adjusted for inflation) has sharply increased.But now that the Federal Reserve’s higher interest rates are starting to seep into the national economy, cracks may be forming. Despite the steady job gains, the U.S. labor market is showing indicators of cooling off. The BLS data continue to highlight that job growth is slowing, says Mark Zandi, chief economist at Moody’s Analytics.
The July print was below the monthly average gain of roughly 300,000 over the past 12 months, and the headline figure was the lowest since 2020.
“The U.S. economy is expected to grow very little in 2023. This would lead to a jump in unemployment to as high as 4.6 percent, according to the Federal Reserve,“ Jill Gonzalez, a WalletHub analyst, said in a note. ”Both of these things would be signs of the Fed continuing to try and get a handle on inflation. If this ‘worst-case scenario’ comes true, it could mean that millions of people who now have jobs could wind up unemployed.”
But the debate over the health of the labor market—and the broader economy—rages on.
A chorus of other market observers has dismissed the latest revisions and other metrics, arguing that the U.S. economy still added about 4 million new jobs during this period. In addition, since March, the country has created more than 1 million positions, suggesting that the United States is far from entering a recession.
As for the labor market, CBO researchers anticipate that the unemployment rate will jump to 4.1 percent by the end of the year and surge to 4.7 percent by the end of 2024.
“Payroll employment declines by an average of 10,000 jobs per month in 2024 and rises by an average of 6,000 jobs per month in 2025,” the CBO stated.
