Monthly Job Growth Halved
Largest Downward Revision Since 2000
Rate Cut Likely by End of This Month
The U.S. authorities have revised their employment statistics, revealing that the country's job situation was worse than initially assessed. This downward adjustment in job growth demonstrates that the U.S. labor market is in a much more deteriorated state than the market had anticipated. As concerns over sluggish employment coincide with fears of an economic slowdown, pressure on the Federal Reserve (Fed) to cut interest rates is expected to intensify further.
On September 9 (local time), the U.S. Department of Labor announced that it had revised down the annual increase in nonfarm jobs as of March by 911,000 compared to previously released figures. This means that from April last year to March this year, the monthly job growth in the United States was about 76,000 less than previously reported. As a result, the average monthly job increase for this period was changed from 147,000 to 71,000. Since this adjustment targets the period up to March this year, it does not reflect any further deterioration in the current employment situation. However, these revised figures suggest that the U.S. labor market was much weaker than the market had expected.
The Washington Post highlighted, "This revision is notable as it is the largest downward adjustment since 2000," and interpreted that "the data provides a clearer picture of the weakening labor market." The Financial Times also assessed, "Such a revision is evidence that the job market was much weaker than it appeared."
However, considering that job growth in August was only marginal, this downward trend could amplify concerns that the labor market is faltering. This is why Wall Street is closely monitoring future labor market trends. Sal Guatieri, Chief Economist at BMO Capital Markets, pointed out, "This suggests that employment momentum had already weakened even before the trade war began, and recent indicators show that the labor market has contracted even further since then."
Concerns over an economic slowdown are also resurfacing. Jamie Dimon, CEO of JPMorgan Chase, commented on the sharp downward revision of annual job growth in the United States, saying, "I believe the economy is weakening." In an interview with CNBC, he added, "However, I cannot be certain whether the economy is entering a recession or simply slowing down. There are conflicting factors at play in the current U.S. economy, so all we can do is wait and see."
With both declining employment indicators and the risk of an economic slowdown being detected simultaneously, pressure on the Fed to cut interest rates is likely to increase. Michael James, Managing Director at Rosenblatt Securities, stated, "The revision of employment data supports the expectation that the Fed will begin its rate-cutting cycle at the end of this month. While the Consumer Price Index (CPI) to be released on the 11th will be a variable, the weakening labor market is further raising the likelihood of a rate cut."
Given these developments, there are also projections that the pace of rate cuts could accelerate. James Knightley, an economist at ING, predicted, "The Fed will implement additional rate cuts not only in September but also at the meetings in October and December." Reported by Kim Minyoung.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
