The US labor market was probably cooler than expected in the year to March, Labor Department data showed on Wednesday, signaling weaker but still positive growth.
US employers are estimated to have added 818,000 fewer jobs than initially reported for the 12-month period, meaning job growth in the world’s largest economy slowed by about 68,000 in the month.
While that marks a significant drop, it was less dramatic than the loss of up to a million predicted by some economists and could be revised further.
“You’re seeing something that’s much cooler than in the past, but still positive and still relatively strong,” said EY chief economist Gregory Dako.
“The nuance there is very important,” he added, telling AFP that the data “does not show a weak labor market.”
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The revisions do not take into account unauthorized immigrants who have contributed significantly to employment growth in recent years, noted Nationwide Chief Economist Kathy Bostjancic.
These initial benchmark reviews are carried out annually, with final numbers expected in early 2025.
But Wednesday’s data drew intense scrutiny ahead of November’s presidential election — given voters’ worries about the economy — and expectations that the Federal Reserve will make its first post-pandemic rate cuts from September.
Daco also cautioned that this does not mean a further 50 basis point rate cut by the central bank is a foregone conclusion — unless the government’s August payrolls report shows further weakness or inflation slows more quickly.
July’s disappointing hiring data, along with a rise in the unemployment rate, sparked alarm earlier this month and sent stock markets into a panic over fears of a recession.
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Markets have since rebounded, after further reports reassured traders about the health of the economy.
“This doesn’t challenge the idea that we’re still in an expansion, but it does signal that we should expect monthly job growth to be more muted and put additional pressure on the Fed to cut rates,” said Navy Corporate Economist Federal Credit Union. Freak.
The US economy has “created a lot of jobs” even with the revisions, added Ryan Sweet of Oxford Economics.
Job growth appears strong, he added, though not enough to keep pace with the growth in the working-age population. This is less threatening than if the market weakened due to layoffs.
All eyes are on Fed Chairman Jerome Powell this week as he addresses the annual gathering of central bankers and economists in Jackson Hole, Wyoming.
Daco said this is an opportunity for Powell to regain control of the policy narrative, including determining where policymakers think the economy is headed and what the pace of interest rate easing will be.
Source: AFP