The downgraded estimate follows a jobs report for July that was much worse than expected, leading many economists to suggest that the Fed had waited too long to begin cutting interest rates to support the economy. The unemployment rate rose for the fourth straight month, to a still-low 4.3%, and employers added just 114,000 jobs.
The Fed raised its benchmark rate 11 times in 2022 and 2023 to fight inflation, which hit a four-decade high more than two years ago. Year-over-year inflation has since plummeted — from 9.1% in June 2022 to 2.9%, clearing the way for the Fed to begin cutting rates when it next meets in mid-September.
The revised hiring estimates released Wednesday are intended to better account for companies that are either being created or going out of business.
“This doesn’t challenge the idea we’re still in an expansion, but it does signal we should expect monthly job growth to be more muted and put extra pressure on the Fed to cut rates,’’ said Robert Frick, economist at the Navy Federal Credit Union.
In the revisions, new professional and business services jobs — a broad category that includes managers and technical workers — were reduced by 358,000 in the 12 months that ended in March. Leisure and hospitality employers — including hotels and restaurants — added 150,000 fewer than first reported.