1、 Adjustment of US employment growth expectations

The employment growth in the United States in the year ending March 2024 may not be as strong as initially estimated, which could raise concerns about the Fed falling further behind in lowering interest rates.

2、 Major institutions' predictions and influencing factors

Economists from Goldman Sachs and Wells Fargo expect the government's preliminary benchmark revision on Wednesday to show that salary growth in the year ending March 2024 will be at least 600000 less than currently estimated, or about 50000 less per month. Morgan Stanley's forecasters believe a decrease of about 360000, while Goldman Sachs suggests it could be as high as 1 million.

Every year, the US Bureau of Labor Statistics revises the March employment levels based on a more accurate but less timely data source called the "Quarterly Census of Employment and Wages," which is based on state unemployment insurance tax records and covers almost all US job positions. The latest quarterly census report released in June has hinted at weaker salary growth last year.

3、 Potential impact of preliminary revisions

There are some warnings in the preliminary data, but the downward correction of employment numbers exceeding 501000 will be the largest in 15 years, indicating that the cooling time of the labor market is longer than initially thought, perhaps to a deeper extent. The final data will be released early next year. These data may also affect the tone of Federal Reserve Chairman Jerome Powell's speech in Jackson Hole, Wyoming this weekend. Investors are trying to understand when and to what extent the Federal Reserve will start lowering interest rates as inflation and the job market are cooling down.

4、 Revision of Employment Growth and Economic Risks

The preliminary revision may reignite the debate on whether a slowdown in the labor market will lead to a more drastic economic downturn. Employers significantly reduced recruitment in July, and the unemployment rate rose for the fourth consecutive month. Although this led to a $6.4 trillion global market sell-off, the S&P 500 index has fully recovered.

5、 Market reactions and future prospects

Although other employment indicators have reassured the market and the foundation of the job market is stable, policy makers are still highly likely to start reducing borrowing costs in September. Powell and his colleagues recently stated that they are more focused on the labor aspect of their dual mission, and he will consider benchmark revisions in his speech at the Federal Reserve's annual seminar on Friday.

After the initial benchmark forecast by the government, it will be revised and included in the January employment report to be released in February next year.

6、 Editor's viewpoint:

The expected adjustment of employment growth in the United States has attracted widespread attention. The different predictions of major institutions reflect the uncertainty of economic trends. Preliminary revisions may have significant impacts on the economy and markets, especially during critical periods of Federal Reserve decision-making. The changes in the labor market not only affect the stability of the economy, but also play an important role in the trend of the financial market. In the future, it is necessary to closely monitor further changes in employment data and the policy response of the Federal Reserve to better grasp the direction of the economy.