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The Bureau of Labor Statistics has initially revised down its payrolls benchmark by 818K for March 2024, but Goldman Sachs said Wednesday it sees the revision as “exaggerated”.
The downward adjustment to payrolls growth between April 2023 and March 2024 was about 68K jobs a month, which Goldman Sachs said was in line with its previous expectation of a drop between 600K-1M jobs.
However, “we think that today’s downward revision to payroll growth exaggerates the degree to which job growth has been overstated by about 500K,” Goldman Sachs chief economist Jan Hatzius said in a research note.
GS offered two reasons for its view, saying:
- The Quarterly Census of Employment and Wages (QCEW) program likely excludes many unauthorized immigrants who are not in the unemployment insurance system but were correctly picked up in payrolls initially and
- the QCEW itself has tended to be revised up in recent years.
“As a result, we think the true downward revision should be about 300k or 25k per month, which would imply that monthly job growth over this period was closer to 215K-220K than the initially reported 242k, but not as low as the 174k pace implied by the revisions,” Hatzius said.
Goldman said downward revisions were largest in the professional services, leisure and hospitality, and manufacturing sectors. BLS said its final revision will be issued in February 2025.
In markets Wednesday, stocks (SP500)(COMP:IND)(DJI) closed higher after minutes from the Federal Reserve’s July meeting showed “several” policymakers were ready to start reducing interest rates.
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