US Job Growth Falls Short of Projections by Over 300,000
US job growth throughout much of the past year fell short of previous projections by over 300,000 jobs, as revealed by new federal data released on Wednesday.
During its annual benchmark review of payroll data, the Bureau of Labor Statistics (BLS) revised down the employment gains of March 2023 by 306,000 positions.
Despite this downward revision, which was lower than some estimates, the American labor market retains historical strength.
Spread out over the previous year, this translates to around 25,000 fewer net jobs added per month, indicating that the average monthly job gain for the 12 months ending in March 2023 was approximately 312,000, in contrast to the previously stated 337,000, according to BLS data.
“The change is -0.2%, and the average adjustment over the last 10 years has been 0.1%,” wrote Chris Rupkey, an economist with FwdBonds, in a note on Wednesday. “We don’t see any sign here that the labor market is secretly weak.”
Rupkey added, “Keep in mind the economy is still growing, having created 870,000 more jobs since March… No recession looming here in the benchmark revision.”
Most of the downward revisions were seen in the transportation and warehousing sector (down by 146,400) and the professional and business services sector (down by 116,000).
Brett Ryan, senior US economist for Deutsche Bank, remarked, “It’s not an eye-opening revision that would really change the picture in terms of where the economy is at right now.”
The economy’s pace has shifted from a red-hot rate of growth to a consistently robust one, layoffs have not become widespread, and consumer spending remains sufficient to support economic expansion.
“The probability of the economy slipping into a recession near term has certainly diminished,” said Ryan.
While Deutsche Bank economists maintain a recession as their base case, they plan to review those projections after key economic data is released in the coming weeks, including the August jobs report, inflation and consumer spending indicators, and GDP revisions.
Some challenges include rising delinquency rates on credit card and auto loan debt, reduction of excess savings, and slower job growth. However, the economy’s momentum appears more resilient going into these challenges, potentially allowing it to withstand upcoming headwinds.
Federal data is subject to change as more accurate information becomes available. The Labor Department’s monthly jobs report is based on employer survey responses. The initial estimate is then revised twice more.
Each year, the BLS revises its data from its monthly survey of business payrolls, aligning March employment levels with those measured by the Quarterly Census of Employment and Wages program, which provides a more comprehensive read on businesses, employees, and wages.
Wednesday’s preliminary benchmark revision won’t immediately alter existing monthly employment data. The totals for 2022 will be updated in February 2024 when the final benchmark revision is issued.
