The US Bureau of Labor Statistics (BLS) has slashed job gains it previously announced for July and August by a total of 60,000. These earlier, more optimistic employment figures had served as a factor in the US Federal Reserve’s interest rate hike on September 16.
When the Federal Reserve voted in July, the BLS initially reported a 21,000 job gain, but that figure has since been revised to show a 10,000 loss. The bureau also cut 29,000 jobs from its initial estimate for August. According to the BLS, the downward revisions are the result of additional business and government reports alongside seasonal recalculations, providing more accurate information.
Ahead of the rate decision, the Fed's statement claimed that job gains had kept pace with the workforce and that the unemployment rate had changed little. Officials also pointed to increasing job openings and weekly hours, relying on data indicating the economy was acting consistent with full employment. However, the rate of US job creation has been declining for five years.
Following the initially optimistic report for August, UBS noted that market odds of an interest rate hike climbed from 50% to 60%. September data subsequently worsened the picture as US employers added only 29,000 jobs against a forecast of 84,000, while the unemployment rate rose to 4.2%. Jefferies’ chief US economist described the August figures as nothing more than a rebound from weak hiring in June and July.
Financial blogger ZeroHedge argued that the Fed would not have hiked rates in the first place had accurate data been available. Prior to the BLS revisions, 16 of 18 members of the Federal Open Market Committee expected to hike rates again before the end of the year, a forecast that now faces heightened scrutiny.
