US job growth revisions signal economic weakness
The American economy added 911,000 less jobs than initial estimates suggested from the year to March, according to preliminary data from the Labor Department published on Tuesday.
The Routine Annual Report – A Payroll Data Revision – has shown that the job market had increased at a slower pace than we thought before at the end of the Biden administration and in the first months of the Trump administration.
Economists had anticipated a strong decline revision, but the lowest and expected figure has strengthened concerns about the health of the world’s greatest economy.
The federal reserve closely monitors signs of sweetness on the job market before its meeting next week.
The American central bank is expected to reduce its reference interest rate after stable conservation rates so far this year, as it weighs signs of a slowdown in the job market against fears that the prices of US President Donald Trump can rekindle inflation.
Last week, the Labor Department said that employers added only 22,000 jobs in August, less than expected, while the unemployment rate increased from 4.2% to 4.3%. Tuesday data added to this image of a slowing job market, strengthening expectations that the American central bank will reduce interest rates next week.
Employment growth revisions are at a politically difficult time for the Bureau of Labor Statistics. Barely a few weeks ago, President Trump responded to signs of a slowdown by pulling the agency chief, accusing Erika McENTARFER, without proof, of fueling the figures to make him look bad.
Analysts say that the most recent problems in the labor market are partly due to the president’s radical changes in pricing and immigration policy, which has always warned economists to harm the economy.
But the revisions of the Labor Department, which include part of the Biden administration, could serve as a boost to President Trump, who has rejected allegations that his policies fuel the weakness of the job market.
“President Trump was right: Biden’s economy was a disaster and the BLS is broken,” the White House press secretary Karoline Leavitt said on Tuesday in a statement.
She has reiterated longtime calls from Trump administration for Jerome Powell, the president of the Fed, to “reduce prices now”.
Wall Street has largely examined the revisions of job growth, the S&P 500 index stable at the start of negotiations on Tuesday. But investors remain on board.
New inflation data should be published on Thursday. This could raise fears of stagflation – a situation in which economic growth slows down while consumer prices increase – in the foreground, said Chris Zaccarelli, director of investments at Northlight Asset Management.
Zaccarelli has added that if a deteriorated job market “should facilitate the reduction of Fed rates this fall, it could also throw cold water on the recent gathering”.
Revisions by the Labor Department were wide, with particularly important adjustments in the Services sectors, including leisure and hospitality.
“Services being the last bastion of employment growth, this does not increase well for the overall health of the labor market,” said Bradley Saunders, economist in North America in Capital Economics, in a research note.
