US payroll growth in the year through March may have been weaker than previously reported — to the tune of 500,000 jobs — resulting in less-robust numbers that could make the Fed think twice about further rate hikes, according to a report.
Last year, the US Bureau of Labor Statistics employment reports repeatedly shocked economists with larger-than-expected payroll gains that saw over 10 million job openings for 20 straight months — a record-breaking streak that ended in January and a key reason behind the Federal Reserve’s continued interest rate hikes.
However, Daniel Silver, an economist at JPMorgan Chase, estimates that when the federal agency’s preliminary benchmark revision is released on Wednesday, it will be nearly half a million off from the level of total employment reported in the year through March, according to a report shared with The Post.
If Silver is correct, that would mean there are 40,000 fewer jobs per month over the 12-month period ended in March than the BLS originally reported.
It’s typical for the BLS to revise its past jobs reports. Typically, with every month of fresh payroll data, the agency looks back at the two previous months and edits its database accordingly.
In its latest July jobs report — when hiring cooled to its lowest level since 2020 — the BLS revised May by 25,000, meaning it’s more likely that 281,000 jobs were added to the US economy that month rather than the 306,000 originally reported.
The BLS also benchmarks March payroll data in a more accurate report that covers nonfarm employment called the Quarterly Census of Employment and Wages (QCEW), which is based on state unemployment insurance tax records.
Once March payroll figures are established, the change is proportionally distributed across the prior 12 months.
The BLS’ first-quarter QCEW report will be released on Wednesday.
Despite expectations that the QCEW will show weaker payroll growth figures, Silver said in his report that “the revised average monthly rate of job growth would still look strong over the year through March 2023, at around 300,000.”
The figure, Silver noted, “would be trimmed down from the 337,000 average pace currently shown in the BLS data.”
Standard Charter Bank analyst Steven Englander estimates that the downward revision could be even worse than Silver predicts, at around 650,000, according to Bloomberg.
That would indicate “a much weaker labor market profile” than what guided Fed tightening in recent quarters, Englander told the outlet. “This would reduce the pressure for further hikes.”
Bloomberg Economics’ Stuart Paul also believes the QCEW data will be weaker than recent headlines suggest.
“People who have been outright saying ‘the labor market is tight’ might be in for a shock,” he told Bloomberg.
It’s the US job market’s supposed resilience that has played an important role in the Fed’s decision to hike interest rates to a 22-year high last month, increasing the benchmark federal-funds rate to a range between 5.25% and 5.5% in an effort to bring inflation back down to its pre-pandemic level of 2%.
Fed officials have warned that strong hiring can often fuel inflation if companies feel compelled to raise pay to attract and keep workers.
Thus, a slowdown in job growth and pay raises could help the Fed reach its 2% inflation target.
When The Post sought comment from the BLS, a spokesperson declined to comment on estimates, adding that they can only “answer questions about published BLS data.”