Government Revises Employment Data: 358,000 Private Sector Jobs Vanish

A hiring sign is displayed at a restaurant in Prospect Heights, Ill., on April 4, 2023. Nam Y. Huh/Reuters

U.S. employment growth over the past year has been weaker than what the federal government has reported, according to newly revised data.

The Bureau of Labor Statistics (BLS) published its annual benchmark review of payroll figures on Aug. 23, covering the 12 months ending in March. The report showed that U.S. payroll growth was revised lower by 306,000 jobs, amounting to approximately 25,000 fewer net jobs added per month in this span.

Private nonagricultural payrolls were lowered by 358,000, while government payrolls were revised up by 52,000.

Preliminary benchmark revisions were broad-based, as most sectors saw lower job growth. The changes were led by transportation and warehousing (negative 146,400), professional and business services (negative 116,000), private education and health services (negative 46,000), and manufacturing (negative 43,000). The “other services” category shed 63,000 positions. Retail and wholesale trade job gains were revised higher by 38,200 and 47,700, respectively. Construction positions were also altered upward by 30,000.

Overall, the benchmark revision totaled negative 0.2 percent, the BLS noted. By comparison, the average adjustment over the past decade has been 0.1 percent, with a range of negative 0.3 percent and 0.3 percent.

Revisions have played a major part in the monthly job reports as employment gains have been revised lower every month this year. The July jobs report revised down the May and June employment gains by a combined 49,000. The U.S. economy hasn’t seen six straight months of downward revisions outside of recessions since the peak of the housing bubble in 2007.

EJ Antoni, a public finance economist at The Heritage Foundation, thinks this trend of downward revisions will continue.

“Looking forward to future monthly employment reports, whatever statistical issues have caused the consistent downward revisions seem to be persisting, so I would expect the trend to continue,” Mr. Antoni told The Epoch Times. “That makes it less important to look at the preliminary headline numbers and more important to look at revisions, including the final annual benchmark revision.”

The current preliminary revision won’t impact existing employment numbers.

Putting Out the Fire

The U.S. labor market has been red hot since 2021. The country recovered all of the jobs lost to the coronavirus pandemic in August 2022, the unemployment rate is at a five-decade low of 3.5 percent, and nominal wage growth (not adjusted for inflation) has sharply increased.

But now that the Federal Reserve’s higher interest rates are starting to seep into the national economy, cracks may be forming. Despite the steady job gains, the U.S. labor market is showing indicators of cooling off. The BLS data continue to highlight that job growth is slowing, says Mark Zandi, chief economist at Moody’s Analytics.

“Job growth has been slower than estimated,” Mr. Zandi wrote on X, formerly known as Twitter. “This according to the BLS, which released its benchmark revisions today. The revisions suggest that [average] monthly job growth in the [year] ending this March is near 300k, and less than 200k since then. Strong, but slowing.”

The July print was below the monthly average gain of roughly 300,000 over the past 12 months, and the headline figure was the lowest since 2020.

The Department of Labor’s diffusion index—a measurement that gauges the percentage of 256 industries adding jobs—tumbled to 57.2 in July, down from 72.2 at the same time a year ago (anything above 50 indicates expansion). The manufacturing component, which monitors 72 industries, also came in at 53.5, down from 67.4 in July 2022.

Temporary work employment has also eased, sliding 22,000 in July to a two-year low and down about 205,000 since the peak in March 2022. Economists note that this is a leading indicator of a cooling labor market, with temp staff usually the first to be terminated when growth is slowing or falling.

“The U.S. economy is expected to grow very little in 2023. This would lead to a jump in unemployment to as high as 4.6 percent, according to the Federal Reserve,“ Jill Gonzalez, a WalletHub analyst, said in a note. ”Both of these things would be signs of the Fed continuing to try and get a handle on inflation. If this ‘worst-case scenario’ comes true, it could mean that millions of people who now have jobs could wind up unemployed.”

But the debate over the health of the labor market—and the broader economy—rages on.

A chorus of other market observers has dismissed the latest revisions and other metrics, arguing that the U.S. economy still added about 4 million new jobs during this period. In addition, since March, the country has created more than 1 million positions, suggesting that the United States is far from entering a recession.

Looking ahead, the Congressional Budget Office (CBO) revised its latest economic projections higher, projecting that the real gross domestic product (GDP) growth rate for the year as a whole is expected to be 0.9 percent. For 2024 and 2025, the CBO estimates that real GDP will climb by 1.5 percent and 2.4 percent, respectively.

As for the labor market, CBO researchers anticipate that the unemployment rate will jump to 4.1 percent by the end of the year and surge to 4.7 percent by the end of 2024.

“Payroll employment declines by an average of 10,000 jobs per month in 2024 and rises by an average of 6,000 jobs per month in 2025,” the CBO stated.

The Atlanta Fed Bank’s GDPNow model estimate suggests a third-quarter expansion of 5.8 percent.