Monthly employment reports overstated the number of job created by the U.S. economy by 818,000 in the 12 months that ended in March 2024, the Labor Department reported on Wednesday, August 21. That revision, part of the annual process that reconciles job reports derived from monthly surveys with state records, says that employers added about 174,000 jobs per month on average during that period, down from the previously reported pace of about 242,000 jobs. That’s a drop of about 28%.
This year’s revision was unusually large. Over the previous decade, the annual updates had added or subtracted an average of about 173,000 jobs to each year’s total. But large revision aren’t unknown. Job growth for the year ending March 2019, for example, was revised down by 489,000, or about 20%.
Wall Street economists were expecting the drop with some estimates putting the revision at 1 million jobs.
The number confirms Wall Street’s belief that the Federal Reserve has waited too long to begin interest rate cuts and that the central bank needs to reduce rates beginning with the September 18 meeting. Therefore this revision hasn’t changed the odes for a September cut–now at 100% on the CME FedWatch tool, but the news did shift bets on the size of the cut with the odds for a larger 50 basis point cut, instead of a business-as-usual 25 basis points, rising to 38% from 29% the day before.
The effect of the revision is more apparent in sentiment for a cut at the November 7 Fed meeting. Odds for a 50 basis point cut at that meeting climbed to 48.5% from 40.9% the day before.
Odds of an additional 25 or 50 basis points of cuts at the Fed’s December 18 meeting–that would bring total 2024 cuts in interest rates to 125 to 150 basis points–climbed to 35.6% from 21.7% the day before.
