Labor market revisions rarely make headlines on Wall Street, but Wednesday’s annual benchmark revisions from the Bureau of Labor Statistics caught investors‘ attention. The report revealed that there were 818,000 fewer people employed as of March than previously reported, leading to a revision in the average monthly job gains from March 2023 through March 2024.
According to Capital Economics, the revised data suggests that the average monthly job gains were closer to 174,000 rather than the initially reported 242,000. While economists believe that this report won’t change the Federal Reserve’s plan for a 0.25% interest rate cut next month, it does shed light on the cooling labor market.
The labor market has been showing signs of slowing down, with average job gains decreasing and the unemployment rate rising to 4.3%. However, many in the investment world feel that this data understates the true softness in the labor market. The breakdown of the revisions by industry revealed some interesting insights.
The professional and business services industry saw the largest drop in estimated employment, with a decrease of 358,000 jobs as of March. This was followed by the leisure & hospitality industry. Additionally, there were downward revisions in information (tech) employment by 68,000 and financial activities by 76,000. These revisions collectively removed more than half a million white-collar jobs from the labor market.
The data aligns with the overall sense of unease in industries like tech and finance since the bear market of 2022. Layoffs in tech have been on the rise, with over 165,000 in 2022, 260,000 in 2023, and 130,000 this year. Wednesday’s revisions took 0.5% off the estimated workforce size as of March, but the tech, finance, and business services industries saw larger drops of 1.6%, 2.3%, and 0.8%, respectively.
These industries, which encompass jobs like tech, finance, and remote work, were hit harder by the revisions. This sheds light on why events like a three-day stock market sell-off can spark recession concerns among those closely monitoring the data. For many, it already feels like a recession is looming.
In conclusion, the labor market revisions from Wednesday offer valuable insights into the state of the economy, particularly in industries like tech and finance. The data highlights the challenges faced by white-collar workers and the broader implications for the overall workforce. As the economy continues to evolve, it will be crucial to monitor these trends and their impact on the labor market.