The Labor Department has revised its estimate of nonfarm payroll growth, reducing it by 818,000.

• The Bureau of Labor Statistics stated that the actual job growth was approximately 30% lower than the initially reported nonfarm payroll numbers during its preliminary annual benchmark revisions.
• Since 2009, the largest revision to the total payrolls level has been -0.5%.
• The largest downward revision at the sector level was in professional and business services, with a job growth difference of 358,000.

The Labor Department reported on Wednesday that the U.S. economy had 818,000 fewer jobs than previously stated in the 12-month period ending March 2024.

The Bureau of Labor Statistics reported that the actual job growth for the nonfarm payroll numbers was nearly 30% less than the initially reported 2.9 million from April 2023 through March of this year.

Since 2009, the largest revision to the total payrolls level has been -0.5%. The BLS revises the numbers each month, but conducts a broader revision annually using the results of the Quarterly Census of Employment and Wages.

The revisions numbers were eagerly anticipated by Wall Street, with many economists forecasting a significant decrease in the initially reported figures.

Despite the BLS reporting more than 2 million jobs created during the period, the labor market may not be as strong as previously stated, which could prompt the Federal Reserve to lower interest rates.

"According to Jeffrey Roach, chief economist at LPL Financial, the labor market is weaker than previously reported. As a result, the Fed will be able to emphasize both aspects of the dual mandate, and investors should anticipate the Fed to prepare markets for a cut at the September meeting."

The largest downward revision in job growth occurred in the professional and business services sector, with a difference of 358,000 jobs. Additionally, leisure and hospitality, manufacturing, and trade, transportation, and utilities sectors also experienced lower revisions of -150,000, -115,000, and -104,000 jobs, respectively.

Within the trade category, retail trade numbers were cut by 129,000.

Several sectors experienced upward revisions, including private education and health services (87,000), transportation and warehousing (56,400), and other services (21,000).

Government jobs were little changed after the revisions, picking up just 1,000.

The labor market is showing signs of weakening, as the unemployment rate has increased to 4.3% from 3.5% in July 2023, triggering the Sahm Rule, which indicates that the economy is in a recession. Despite this, nonfarm payroll jobs totaled 158.7 million through July, an increase of 1.6% from the same month in 2023.

The decline in the unemployment rate is mainly due to an increase in people re-entering the workforce, rather than a significant rise in layoffs.

Despite closely monitoring the jobs situation, Federal Reserve officials are predicted to approve their first interest rate cut in four years during their upcoming meeting in September. Chair Jerome Powell will deliver a highly anticipated policy speech at the Fed's annual retreat in Jackson Hole, Wyoming, which could pave the way for easier monetary policy.