The U.S. Bureau of Labor Statistics released the preliminary report on Q1 non-farm employment and payrolls (QCEW) last night (21st). The data showed that the number of employed people in the past year as of March this year was initially revised down by 818,000, which not only set the largest downward revision since 2009, but also the second highest on record.

The U.S. Bureau of Labor Statistics released the preliminary Q1 Nonfarm Employment and Wages Census (QCEW) report last night (21), providing revised data on new nonfarm employment in the year from April 2023 to March 2024.

The results showed that the initial downward revision of employment was 818,000, which was equivalent to a downward revision of about 68,000 jobs per month, not only the largest downward revision since 2009, but also the second highest on record. This suggests that the US job market may not be as strong as previous data showed.

Note: QCEW data comes from unemployment insurance tax records of various states in the United States, covering almost all jobs, so the accuracy of this data is much higher than the non-agricultural data released monthly, but the disadvantage is that the timeliness will be much worse.

Will the downward revision of non-farm payrolls data bring about concerns about economic recession again?

The revised data showed that the job market began to cool much earlier than previously expected, and it was not until the July non-farm payrolls report showed weak corporate hiring and the unemployment rate rose for the fourth consecutive month that the alarm bells were sounded.

In this regard, Robert Frick, corporate economist at Navy Federal Credit Union, said:

The market had previously predicted a downward revision of up to 1 million (Goldman Sachs estimate), so the results of this report were not surprising and did not challenge the view that the US economy is still in an expansionary phase.

However, the data did point to more modest monthly job growth, putting pressure on the Fed to cut interest rates next month.

Charu Chanana, head of foreign exchange strategy at Saxo Bank, pointed out that the sharp downward revision of the data may rekindle concerns about the weakening employment situation:

This is an issue that Powell may need to address, and if the August U.S. nonfarm payrolls report, released on September 6, shows clear weakness, I might support a 50 basis point rate cut by the Fed.

Michael Reid, an economist at RBC Capital Markets, said:

The revisions to the non-farm payrolls have fueled debate about a weak labor market, but we continue to view the weakness as part of a normalization process rather than a sign of deterioration.

Overall, the market still believes that the revised data will not overly affect people's concerns about deepening economic recession, because the direction and overall magnitude of the revision have been expected to be digested for some time.

All four major U.S. stock indexes rose

Although the revised employment data deepened concerns about a job market recession, perhaps because the market had already digested it in advance and the FOMC meeting minutes were dovish, most policymakers expected that if the data continued to cooperate, they would start to cut interest rates. The four major U.S. stock indexes were not greatly affected and closed higher:

• The Dow Jones Industrial Average rose 55.52 points, or 0.14%, to close at 40,890.49.

• The Nasdaq Composite Index rose 102.05 points, or 0.57%, to close at 17,918.99.

• The S&P 500 index rose 23.73 points, or 0.42%, to close at 5,620.85.

• The Philadelphia Semiconductor Index rose 71.63 points, or 1.38%, to close at 5,267.93.