(The Hill) — The U.S. added 258,000 fewer jobs in May and June than the Labor Department first reported, according to federal data released Friday.
The Bureau of Labor Statistics (BLS) released significant revisions to its May and June employment growth reports, altering the understanding of the U.S. economy amidst a generally underwhelming July jobs report.
According to the BLS, the U.S. economy only generated 19,000 jobs in May, a steep drop from the previously announced figure of 144,000. June also saw a sharp decline, with only 14,000 jobs added compared to the initially reported 147,000. Adding July’s modest gain of 73,000 jobs, the total for the last three months stands at just 106,000.
Bankrate senior economic analyst Mark Hamrick pointed out, “Hiring has hit a wall in the U.S. Substantial downward revisions in payrolls indicate that private sector hiring has averaged just over 50,000 jobs in the last three months.”
While job figure revisions are not uncommon from the BLS, the magnitude of these changes, and their implications for the economy, took experts and investors by surprise following a week of generally strong economic indicators.
The July employment report highlighted a stagnating labor market, with health care as the only major industry showing significant job gains, while others saw minimal increases or declines. This report was published just two days after the Federal Reserve opted to maintain its interest rates, although two Fed board members advocated for rate cuts.
In response, President Donald Trump expressed his dissatisfaction with the Federal Reserve and its chair, Jerome Powell, just before the report’s release. Trump called on the Fed board to challenge Powell on upcoming decisions and cautioned about potential future disagreements from board members.
The combination of slowing job gains and rising inflation, however, make it harder for the Fed to respond without exacerbating either issue. Cutting interest rates can fuel economic activity to support job growth, but also risks fueling inflation. Keeping interest rates at moderately high levels can help snuff out inflation, but could hold back the job market.
“Persistent policy uncertainty, tariffs, and diminished immigration flows paralyzing employers, the US economy is now flirting with job losses, revealing a labor market that is much weaker than most Fed policymakers had believed,” wrote EY-Parthenon chief economist Gregory Daco in an analysis.
This dynamic, he said, now puts the Fed “behind the curve.”
