Up to a million jobs could disappear from U.S. employment data, according to revised figures released this week.
Job growth in the year to March was probably much lower than initially estimated, leading bankers warn.
This could rekindle concerns that the U.S. economy is not as robust as it appears and that the Federal Reserve is falling behind on its goal of lowering interest rates.
The government will publish its first revisions to its jobs growth data on Wednesday, with final figures due early next year.
Goldman Sachs economists expect job growth for the year to be at least 600,000 weaker than current estimates, and the decline could be as much as 1 million.
A downward revision of more than 501,000 would be the largest in 15 years, Bloomberg reported and would suggest that the labor market has been cooling for longer than originally thought.
Experts have warned that up to a million jobs could disappear from US employment data in revised figures released this week.
As things stand now, figures from the Bureau of Labor Statistics show the U.S. economy added 2.9 million jobs in the year to March 2024.
This represents an average of 242,000 per month.
Once a year, the government revises the March figure using a more accurate and detailed quarterly data source.
If the total revision reaches 1 million, monthly job gains would be around 158,000 a month, Bloomberg reported.
Wells Fargo economists also expect earnings to fall with the revised figure.
“A large negative revision would indicate that hiring strength was already fading before last April,” Wells Fargo economists Sarah House and Aubrey Woessner said in a note last week.
They said this could heighten concerns about the state of the labor market given “softening in other labor market data.”
US job growth fell short of expectations in July and the unemployment rate jumped to the highest level in nearly three years.
This triggered a market sell-off amid fears of an impending recession.
Employers added 114,000 jobs last month, well below the Dow Jones estimate of 185,000.
The unemployment rate also rose to 4.3 percent, the highest level since October 2021.
While the stock market has already recovered, a data revision showing a sharp decline could rekindle fears that the economy is heading for a recession.
“Markets, which have recently experienced a growth scare that has raised concerns that the Fed is lagging, will be monitoring Wednesday’s release of the benchmark index revision to see if the initial market reaction was, in fact, correct,” Quincy Krosby, chief global strategist at LPL Financial, told Bloomberg.
Evercore ISI analysts Krishna Guha and Marco Casiraghi said in a note Monday that while the Fed has been expecting this revision, it “will underscore that the outlook for payrolls strength is not as robust as it had appeared in real time.”
Jerome Powell will take the revised figures into account when he speaks at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, on Friday.
Unemployment rose to 4.3 percent in July, the highest level in almost three years
The Federal Reserve kept interest rates between 5.25 and 5.5 percent at its last meeting
Other economists predict the revision could be toward the smaller end of the range of estimates.
JPMorgan Chase analysts are predicting a smaller decline of 360,000 jobs, according to Bloomberg.
Some suggest that even if monthly job gains fall to 158,000, this is still a healthy pace of hiring.
Federal Reserve Chairman Jerome Powell will take the revised figures into account when he speaks at the annual symposium in Jackson Hole, Wyoming, on Friday.
At its latest meeting, the central bank said it is focusing more on the jobs aspect of its dual mandate, which also includes bringing the annual inflation rate down to its 2 percent target.
Policymakers are expected to start cutting interest rates in September, after keeping benchmark borrowing costs at a 23-year high from July 2023.
