The assumed strength of the U.S. labor market development is found to be notably inferior.
Over the past year, the U.S. labor market has shown more weakness than initially anticipated. On Wednesday, the Labor Department in Washington revised its job count for the period between April 2023 and March 2024, reducing it by 818,000 jobs or 0.5 percent.
The service sector saw the most significant drops compared to the initial estimate, with a decrease of 1.6 percent, followed closely by the hospitality and leisure sector with a drop of 0.9 percent. Employment in the public sector remained relatively stable. The department made adjustments to the numbers for certain sectors, such as logistics, which saw an increase of 0.9 percent, and utilities, which saw a 0.3 percent boost.
This revision raises concerns among investors that the Federal Reserve's monetary policy may have been too aggressive. The central bank views the softening of the labor market as a key step towards achieving its long-term 2 percent inflation goal. In this regard, the Fed is also closely monitoring wage growth. Of late, the robust U.S. labor market has shown signs of weakness, and fears of a recession have increased.
The revised job count now shows an estimated 818,000 fewer jobs than initially anticipated, representing a 0.5% decrease. This estimated decrease in employment is causing apprehension among investors about the Federal Reserve's monetary policy.
