The labor market was less strong than expected, with employment falling by 818,000. (iStock )
of The U.S. Bureau of Labor Statistics recently The U.S. saw 818,000 fewer payrolls over the past 12 months (through March) than previously expected. The -0.5% difference was reported in the provisional estimates for the annual revision of the BLS employment report. Consumers won’t know the final figures until February.
The biggest difference came in the professional and business services sector, which revised down employment to 358,000 fewer than initially reported. Retail trade had the second largest revision, down 129,000. Manufacturing had the third largest revision, down 115,000.
The labor market is not in dire straits, but the unemployment rate is still hovering around 4.3%, higher than it will be at the start of 2023, Federal Reserve Chairman Jerome Powell said. As explained in a recent comment.
The rise in unemployment isn’t due to more layoffs, but rather to a much larger supply of workers, and, Powell said, a “slowdown in the previously ferocious pace of hiring.” In general, the job market is getting stronger.
“Overall, the economy continues to grow at a solid pace,” Powell explained, “but inflation and labor market data suggest that conditions are shifting. Upside risks to inflation have decreased, while downside risks to employment have increased.”
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The Federal Reserve is still poised to cut rates in September
Consumers have been waiting for the Federal Reserve to cut interest rates since multiple potential cuts were announced earlier this year, and September appears to be the meeting where that finally happens.
The Federal Reserve has refrained from cutting interest rates because inflation has been consistently high. If inflation were to approach 2%, the Fed would be more likely to cut interest rates. A majority of Federal Reserve officials have argued that the central bank is likely to cut rates slightly in September. According to the minutes: From the July policy meeting.
“Our tightening monetary policy has helped restore balance between aggregate supply and aggregate demand, easing inflationary pressures and helping to keep inflation expectations well anchored,” Powell said.
Inflation was trending lower earlier this year but has since been on the right track, meaning Americans can expect interest rates to fall soon, which will affect borrowing costs for mortgages, auto loans, student loans and other financing options.
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Consumer sentiment remains stable
Consumer sentiment about the economy held steady last month, suggesting that Americans are somewhat more optimistic about the current state of the economy than they have been in recent years. In August, consumer sentiment rose 2.1%, remaining roughly stable for the fourth consecutive month. PYMNTS reported.
The outlook for the future of the economy is less stable, instead surging to a five-month high due to the election season. An election year is not likely to change current economic sentiment, but it could affect how Americans think about the future of the economy.
“Survey responses generally include consumers’ current predictions for who will be the next president,” said Joan Hsu, director of consumer research at the University of Michigan. “Some consumers have noted that if their election predictions do not come true, the trajectory of the economy will be quite different.”
The uptick in consumer sentiment about the future is due in part to Democrats’ growing confidence in Vice President Kamala Harris, the new Democratic presidential nominee. Falling inflation is also contributing to the brightening outlook, PYMNTS reported.
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