As many as a million jobs could vanish from US jobs data in revised numbers released this week.
Jobs growth in the year through March was likely much lower than initially estimated, top bankers are warning.
This could refuel concerns that the US economy is not as robust as it has appeared, and that the Federal Reserve is falling behind in its aim to lower interest rates.
The government will release its first revisions of jobs growth data on Wednesday, and then the final numbers are due early next year.
Goldman Sachs economists expect jobs growth for the year will be at least 600,000 weaker than current estimates – and the decline could be as much as a million.
A downward revision of more than 501,000 would be the largest in 15 years, Bloomberg reported, and would suggest the labor market has been cooling for longer than was originally thought.
As many as a million jobs could vanish from US jobs data in revised numbers released this week, experts have warned
As it currently stands, the figures from the Bureau of Labor Statistics show the US economy added 2.9 million jobs in the year to March 2024.
This is an average of 242,000 a month.
Once a year, the government revises the March figure using a more accurate and detailed quarterly data source.
If the total revision is as high as a million, monthly jobs gains would be around 158,000 a month, Bloomberg reported.
Wells Fargo economists also expect to see gains fall with the revised figure.
‘A large negative revision would indicate that the strength of hiring was already fading before this past April,’ Wells Fargo economists Sarah House and Aubrey Woessner said in a note last week.
They said it could increase concerns over the state of the labor market given the ‘softening in other labor market data.’
Job growth in the US badly missed expectations in July and the unemployment rate jumped to the highest rate in almost three years.
This triggered a market sell-off amid fears of an impending recession.
Employers added 114,000 jobs last month, which was far below the Dow Jones estimate of 185,000.
The unemployment rate also edged higher to 4.3 percent – the highest level since October 2021.
While the stock market has now recovered, a data revision showing a large decline could reignite fears that the economy is headed for a downturn.
‘Markets, having recently experienced a growth scare that led to concerns that the Fed is behind the curve, will be monitoring Wednesday’s release of the benchmark revision to see if the market’s initial reaction was, in fact, correct,’ Quincy Krosby, chief global strategist at LPL Financial, told Bloomberg.
Evercore ISI analysts Krishna Guha and Marco Casiraghi said in a note Monday that while the Fed has been expecting this revision, it will ‘underline that the picture of strength in payrolls is not as vigorous as it had appeared in real time.’
Jerome Powell will take the revised figures into account when he speaks at the annual Federal Reserve symposium in Jackson Hole, Wyoming, on Friday
Unemployment rose to 4.3 percent in July – the highest level in almost three years
The Federal Reserve held interest rates between 5.25 and 5.5 percent at its latest meeting
Other economists are predicting that the revision may be towards the smaller end of the range of estimates.
JPMorgan Chase forecasters predict a smaller decline of 360,000 jobs, according to Bloomberg.
Some suggest that even if monthly job gains fall to 158,000, this is still a healthy pace of hiring.
Fed Chair Jerome Powell will take the revised figures into account when he speaks at the annual symposium in Jackson Hole, Wyoming, on Friday.
At its last meeting, the central bank said it is focusing more on the labor side of its dual mandate, which also includes bringing the annual inflation rate down to its 2 percent target.
Policymakers are expected to begin lowering interest rates in September, after keeping benchmark borrowing costs at a 23-year high since July 2023.