U.S. economy created 500,000 fewer jobs than previously reported

Newly revised data from the U.S. Labor Department posted Wednesday (Aug. 21) shows the nation’s job market produced a half-million fewer jobs than previously thought over the past year.

In its annual revisions to a survey of U.S. business establishments, the U.S. Bureau of Labor Statistics (BLS) said its preliminary estimate of the Current Employment Statistics (CES) benchmark indicates a downward adjustment to March 2019 total nonfarm employment of 501,000, or  down 0.3%.

Among those revisions, there was nearly an across-the board decline in most industries except for some slight gains in government hiring, information services and financial activities. Among the biggest decliners, leisure and hospitality and professional and business services were revised downward by 175,00 and 163,000 positions, respectively.

Trade, transportation and utilities also saw a decline of 104,000 payroll jobs. In that supersector, the brick- and-mortar retail trade lost a whopping 146,400 jobs, but those revisions were partly offset by gains of 78,700 positions. Other key decliners included education and health services and other services, which lost 63,000 and 28,000 jobs, respectively.

The blue-collar focused construction and mining and logging sectors, which include the oil and gas industry, also saw respective declines in employee estimates at 16,000 and 9,000. The manufacturing sector saw a minor correction that cut the total job count by 3,000 positions.

Earlier this month, The Conference Board’s chief economist Gad Levanon warned that U.S. job growth was slowing, mainly because the fight for talent in the tight job market has hindered hiring. In the Conference Board’s highly watched Employment Trends Index, job growth had continued to hover around a flat trend since the summer of 2018.

“In the second half of 2018, the Employment Trends Index started signaling a slowdown in job growth. So far this year, job growth has indeed slowed down compared to 2018, which is not surprising given the modest economic slowdown and the recruiting difficulties associated with a tight labor market,” said Levanon. “In the coming months, we expect job growth to remain solid, which will be enough to further tighten the labor market. Growing labor force participation rates will somewhat ease these hiring pressures.”

ARKANSAS IMPACT UNKNOWN
What is not known is how the annual revision will impact Arkansas’ job market. On Friday, BLS reported that Arkansas’ jobless rate fell to a record low of 3.4% as 15,625 new jobs were added to the state’s economy over the past year. University of Arkansas at Little Rock economist Michael Pakko said the annual benchmark revision process is a technical adjustment that incorporates more complete information into the initial estimates of nonfarm payroll employment.

“While the revisions can be substantial for state and local data and for individual sectors in the national data, the total employment count is usually not substantially affected,” said Pakko, who heads the university’s Economic Development Institute.

Still, Pakko said the downward revision announced for March 2019 is larger than usual. For example, he the benchmark revision in 2018 was only 16,000.

“The 2019 adjustment is not unprecedented,” he said. “The revision for 2009, a recession year, was negative 902,000.”

To put the revision in context, Pakko said, the total employment increase from March 2018 through March 2019 is reported to be 2,517,000.

“So. the downward revision represents one-fifth of the job growth recorded over that 12-month period,” he said.

According to Pakko, since the onset of the “great recession” at the end of 2007, cumulative employment growth has varied markedly across the state. Employment in Fayetteville and Jonesboro has climbed more than 20%. In Little Rock, Memphis-West Memphis and Hot Springs, cumulative growth has been modest but positive. On the other hand, employment in Texarkana, Fort Smith and Pine Bluff all remain well below their levels in 2007. In Pine Bluff, the cumulative decline is over 13%.

TRUMP ECONOMY
The BLS report was released as President Trump and top cabinet officials have sought to allay fears of a pending recession, often citing the nation’s labor market as the underpinning of a robust economy. However, the 500,000 few jobs will cut the administration’s average monthly job count from 223,000 to only 180,000.

On Monday, U.S. Commerce Secretary Wilbur Ross penned a national opinion column that said the administration’s $1.8 trillion 2017 tax cuts and other policies have boosted worker wages and added millions of jobs to the U.S. economy.

“Contrary to misleading arguments that the President’s policies are not benefitting workers, this data shows that it is the average American workers who are gaining from the country’s broader economic success,” wrote Ross.

The Labor Department’s CES program produces detailed industry estimates of nonfarm employment, hours, and earnings of workers on payrolls each month. To gather that information, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. The final CES benchmark revision will be issued in February 2020 with the publication of the January 2020 unemployment report.