Breaking News: U.S. Job Growth Revised Downward, Setting Stage for Fed Rate Cut
In a surprising turn of events, the Bureau of Labor Statistics has revised down March 2024's employment gains by a staggering 818,000 positions, leading to concerns about the state of the U.S. economy. This significant downward revision is likely to increase the probability of an interest rate cut by the U.S. Federal Reserve next month.
Analysts are warning that the financial markets could be in for a rough ride, as the revised job numbers may trigger another risk-off episode similar to what was seen just a few weeks ago. However, Goldman Sachs is urging investors to take a closer look at the revisions, as they believe the downgrade of job growth may be overstated.
The key source data for the annual benchmark revision, the Quarterly Census of Employment and Wages (QCEW), may not fully capture the contribution of unauthorized immigrants to employment growth in recent years, according to analysts at Goldman Sachs. Additionally, historical data shows that the preliminary estimates of the benchmark revision to payrolls have been consistently below the final revision in recent years.
With the Fed widely expected to cut rates next month, market participants are closely watching the developments. According to CME Fedwatch, there is a 67% chance of a 25 basis point cut and a 33% chance of a 50 bps reduction. This news is likely to have a significant impact on financial markets and investor sentiment in the coming weeks.
In conclusion, the downward revision of job numbers and the potential for a Fed rate cut are important developments that investors need to pay attention to. It is crucial to stay informed and be prepared for potential market volatility in the near future.