The benchmark revisions aren’t good. Provisionally, they were estimated to be -911k or down 76k per month, while Fed Chair Powell thought they would be 60,000 in the final report or 720k. They were actually down 862k. However, the key point is that this wipes out all the job gains in sectors that aren’t government, leisure & hospitality and private education and healthcare services over the past three years. That means the likes of retail, construction, manufacturing, technology, financial services, and business services are failing to generate employment. This will only increase the political pressure on the Fed to cut rates further.
Moreover, even within today’s decent-looking report, private education & healthcare services continue to dominate, contributing 137k of the 130k jobs given government lost 42k. Construction was pretty good, though, rising by 33k.
This report in itself will not be enough to convince the market of an early Fed cut. It will be the same set of voters that chose to adopt a more upbeat assessment on the labour market’s prospects in January, and Chair Powell already stated in December that the Fed was of the view that the BLS was overestimating employment growth substantially. So while the headlines from the revisions look grim, this is unlikely to tip the central bank into cutting before March, especially if headline and core inflation come in at 0.3% on Friday as the market expects.