Downward revisions to U.S. employment data unveiled earlier this week suggest that the monthly number of new roles needed to keep the jobless rate stable was lower in 2024, according to analysts at BofA.
The level of U.S. employment for the 12 months through March was likely 911,000 roles less than previously estimated, a sharp downward revision which suggests that a slowdown in the American labor market may have begun prior to the announcement of President Donald Trump’s sweeping import tariffs.
Economists had anticipated that the preliminary benchmark employment revision from the Bureau of Labor Statistics for the period from April 2024 to March 2025 would be lowered by between 400,000 and 1 million jobs. The changes aim to better factor in businesses that may have opened or closed during that time.
Tuesday’s estimate is based on the Quarterly Census of Employment and Wages, which is derived primarily from state unemployment insurance tax records that nearly all employers must file with state workforce agencies.
A final benchmark revision will be issued in February 2026 with the publication of the BLS’s employment report for January.
In a note to clients, the BofA analysts said full clarity of the labor market picture for the April 2024 to March 2025 period will not emerge until these final revisions are published.
But, taken at face value, the strategists estimatd that the revisions would ammount to three-month average nonfarm payrolls in the first quarter this year of 36,000, down from 111,000 previously. The figure for summer 2024 would be even lower, they added.
"Given that the unemployment rate and other labor slack measures were largely stable in this period, this likely indicates a lower breakeven rate in 2024 perhaps due to the reversal" of an immigration boom in the prior year, the analysts said.
They noted that market pricing of a Federal Reserve interest rate reduction at its upcoming September 16-17 gathering reacted in a "muted" manner to the lower BLS revisions.
Expectations for a drawdown by the Fed of at least 25 basis points have been all but cemented, with policymakers seen prioritizing a cut to help bolster the cooling labor market. There is also a roughly 10% chance of a deeper, half-point cut from the current level of 4.25% to 4.5%, CME’s FedWatch Tool has shown.
Looking forward, the strategists suggested that "upward revisions" to a weak August jobs report could be coming, as the end-of-summer month typically sees fewer responses to the BLS data-gatherers.
"If that happens, it will imply the labor market has also re-accelerated since July after the soft patch in second-quarter due to peak tariff uncertainty to match the strength we are seeing in consumer spending since July," the analysts said.
Source :
https://www.investing.com/news/economy-news/is-it-time-to-panic-about-the-labor-market-bofa-weighs-in-4233307
