Government Agency Revisions Show Job Market Weaker Than Expected

A picture depicting unemployment with a graph and the word unemployment

The Labor Department’s report Friday on March payrolls, coupled with newly revised information from Thursday’s weekly jobless claims, paint the picture of a labor market that may be slowing more than previously thought.

Friday’s March nonfarm payroll report showed jobs grew by 236,000 in the month, slightly below analysts’ expectations. The unemployment rate ticked down to 3.5% from the 3.6% level in February.

Though the report was close to expectations, the 236,000 total was the lowest monthly gain since December 2020.

At least one economist said the true job market picture as April begins could be worse than the March report showed.

“The March data effectively are a look back into the pre-(Silicon Valley Bank failure) world,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The payroll survey was conducted the week after the bank failed, far too soon for employers to have responded, but the hit from tighter credit conditions is coming.”

On Thursday, the Labor Department issued major revisions to its weekly unemployment claims reports, beginning in April 2023 and encompassing the previous five years. The changes dramatically increased the number of jobless claims reported in 2023.

Before Thursday, the Labor Department reported only two weeks in 2023 with weekly jobless claims topping 200,000—the first in the week ending Jan. 7 (206,000) and the second in the week ending March 4 (212,000).

After the revisions issued Thursday, the Labor Department reported only two weeks in 2023 in which jobless claims were less than 200,000—the week ending Jan. 21 (194,000) and the week ending Jan. 28 (199,000).

Before Thursday, the Labor Department reported 2.332 million jobless claims in 2023. After the revisions, jobless claims in 2023 totaled 2.64 million, adding 308,000 previously unannounced jobless claims in the first quarter.

Before the revisions, the four-week average of jobless claims in 2023 peaked at 212,750 the week ending Jan. 7. After the revision, the four-week average has been above 200,000 claims all but one week, peaking at 242,000 the week ending March 25.

“The claims data signal recent softening in the labor market,” said Daniel Silver, an economist at JPMorgan in New York.

Bill Adams, chief economist of Comerica Bank, said: “While the job market is still strong, [it] hit peak tightness in early 2022 and has been softening since. The data in hand right now suggest the job market lost momentum since last fall.”


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