March 2023 to 2024 jobs growth cut 818k. Here’s why it’s not as bad as it sounds.
The noisiest headline today was how 818,000 fewer jobs were created than previously reported from March 2023 to March 2024. Here are a few notes about why this happened, and whether it’s as bad as it sounds. Spoiler alert: it’s not.
– The monthly Bureau of Labor Statistics (BLS) jobs report contains 2 main stats on the first Friday of every month: jobs gained/lost and unemployment rate.
– The jobs gained/lost figures are from the ‘payroll survey’, also known by two other names: Current Employment Statistics (CES) program, or the Establishment Survey.
– The BLS says the payroll survey contains about 119k business and government agencies representing about 629k worksites in the U.S. They produce job gained/lost figures from surveying these businesses, as well as hours worked and earnings estimates by industry and geography.
– In this March 2023 to March 2024 revision — a normal annual revision that hit today and will be finalized February 2025 — it’s believed the 818k jobs cut from the estimate are for two main reasons: (1) adjustments to how many companies started up or shut down, and (2) undocumented workers who were counted originally, then removed.
– Bottom Line On New Jobs: Before this revision, there were about 2.9 million new jobs reported from March 2023 to March 2024, which averages 242,000 new jobs per month. The revision puts monthly net new jobs at 174,000 for the period. Still a pretty healthy job market.
– The image above shows which industries comprise the 818k jobs lost.
– As for the monthly unemployment rate, that’s from a different “Household Survey” of 60,000 eligible households (as opposed to businesses), excluding those serving in the Armed Forces, and people living in residential nursing/care facilities or correctional institutions.
– Bottom Line On Unemployment: As of August 2, the July unemployment rate is 4.3%, and the August unemployment rate will be reported September 6.
– This 818k jobs reduction revision doesn’t change the unemployment rate.
– The MBA calls for the unemployment rate to rise from 4.3% now to 4.5% by year end, and 4.7% by mid-2025.
– Today’s job cut revisions to emphasize a slower labor market theme, which was the Fed’s goal with rate hikes.
– As such, today’s news may support the case for the Fed to potentially move on three rate cuts of 25 basis points each by year-end.
– The remaining Fed meetings for 2024 are September 18, November 7, and December 18.
The link below has more details, and please comment or reach out with questions.
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Reference:
– BLS explains how 818k job cut revision works