Labor market was weaker than previously reported, in big fix to jobs data

The revisions could add to pressure on the Federal Reserve to cut interest rates, because they indicate the labor market wasn’t quite as strong as it looked during this period.

“We already knew we had been living the best of consumers being discerning but not defeated. That narrative is contingent on the labor market holding up and layoffs remaining in check,” said Diane Swonk, chief economist at KPMG. “The Fed needs to cut if they want to sustain the Goldilocks scenario.”

The Bureau of Labor Statistics releases revisions to data all the time, but it’s unusual for revisions to be this large. This set of revisions is considered preliminary; the figure will be finalized in February.

The new data comes as Federal Reserve officials are headed to Wyoming for the annual Jackson Hole Economic Symposium, a “who’s who” of global policymakers and economists. The financial markets were already eager for Fed Chair Jerome H. Powell’s speech there on Friday, anxious for hints about a September rate cut. But now, Fed officials will be pressed to explain how the paired-back jobs figures shape their understanding of an economy that continues to surprise.

It’s unclear whether Powell will directly address the new jobs figures in his remarks, which are carefully calibrated and rarely fixate on an individual data point. But he has already acknowledged that jobs data may not be perfect. Speaking at a news conference in June, Powell said officials were keeping close watch on the job market, even as it had come into better balance since swinging wildly during the pandemic.

“You have payroll jobs still coming in strong, even though, you know, there’s an argument that they may be a bit overstated,” Powell said. “But still — they’re strong.”