After a delayed release, a revision from the Bureau of Labor Statistics confirmed what many economists were expecting this week: the labor market is not as strong as previously thought.
Preliminary annual benchmark revisions to nonfarm payroll numbers show that actual employment growth was revised down by 818,000 jobs. This is a 30% decrease from the 2.9 million jobs initially reported.
Each year, The Bureau of Labor Statistics revises previously reported estimates of job creation. This year’s revision, released August 21, focuses on jobs created from April 2023 through March 2024, and it is the largest downward revision since 2009.
Fed Can No Longer Say the Labor Market is Too Strong
Logan Mohtashami, lead analyst for HousingWire, shared a video on Instagram shortly after the revision was released, stating:
“The one thing that we all know for now that the Fed had used the labor market being so tight, (saying) ‘We have to keep policy very restrictive, we have to attack the labor supply, there’s too (many) jobs being created’…clearly right now, they were clearly behind the curve on that one.”
Like other analysts who were sharing their expectations this week, Mohtashami stated the revised numbers are closer to his forecasting trends. “For my work, it looks very normal,” he said. “But for the Fed—don’t expect them to come out and say, ‘Well, we got this wrong’ .…The question now is, how fast can we get them to get to a neutral policy?”
Reactions to the Revisions
It didn’t take long for X to start filling up with reactions, starting with the frustration regarding the delay of the preliminary benchmark announcement:
https://t.co/WGIAhvrpYq pic.twitter.com/40nBvfBjre
— Logan Mohtashami (@LoganMohtashami) August 21, 2024
that's what $35 trillion in debt buys you https://t.co/GDQY8Hpmm6
— zerohedge (@zerohedge) August 21, 2024
Of course, once the numbers came out, people had plenty more to say:
Job growth wasn't as strong in the year ended March as initially reported.
BLS revisions show the economy added 818,000 fewer jobs than previously reported over the 12 months ended March. That would lower monthly payroll gains (initially +246K) by 68K a month, on average.
This… https://t.co/9iTDeqbZyH
— Nick Timiraos (@NickTimiraos) August 21, 2024
The government just erased 818,000 jobs from their official job growth numbers.
Insane that monetary policy and economic decisions were being made with such bad data for the last 12+ months.
— Anthony Pompliano 🌪 (@APompliano) August 21, 2024
It’s worse.. we make decisions on inflation based on owners equivalent rent carrying the MOST weight in CPI
Owner equivalent rent represents the hypothetical rent that homeowners would have to pay if they were renting their own home.
in other words, a made up number ^^ https://t.co/h3BXxrJBAo
— Byron Lazine (@ByronLazine) August 21, 2024
Revisions to Construction
At the sector level, professional and business services saw the largest revision where job growth was 358,000 less than initially reported.
Construction also saw a meaningful revision, with 45,000 fewer jobs.
Construction jobs fell by 45,000 on BLS revision today…
Leading indicator? Or do we need signs of layoffs in construction before R🚩 status? https://t.co/b1lurKokCC
— Byron Lazine (@ByronLazine) August 21, 2024
All Eyes on Powell
More than ever, economists and market analysts are awaiting what the Fed will do come September. Fed Chair Jerome Powell is set to speak from the Fed’s annual gathering in Jackson Hole, Wyoming on Friday. The anticipated speech could provide clues as to the Fed’s next steps, and what type of rate cut we may see in September.
Stay tuned for more. And to remain up to date on all things housing and economy, subscribe and watch the Hot Sheet, the industry’s only live news show airing four days a week. Every Monday through Thursday at 9:30 am ET, BAM co-founder Byron Lazine breaks down the latest information that agents of change need to know.
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