It may be making too much of out a single quote, but in the minutes of the July 30-31 FOMC meeting said, “Many participants noted that reported payroll gains might be overstated, and several assessed that payroll gains may be lower than those needed to keep the unemployment rate constant with a flat labor force participation rate.”
Fed policymakers will take into account the big 818,000 downward revision in the March 2024 preliminary estimate of nonfarm payrolls, but they may have also incorporated an anticipation of lower payrolls into their thinking already.
Further, while the 818,000 decrease is undeniably big, 44 percent of it occurs in professional and business services with a downward revision of 358,000. This sector has been undergoing a lot of restructuring with massive job losses in the tech sector following sharp gains during the pandemic and as it makes use of AI tools to replace workers. While hiring may have been less overall than previously thought, weaker hiring in the remaining sectors is much more typical of any given year’s revisions.
It should be noted that the downward revision is for the not seasonally adjusted data. It should also be noted that the estimate will not be incorporated into the numbers reported by the BLS until it issues its annual revisions for 2024 with the January 2025 data.
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