US Job Market Revision: 306,000 Payrolls Overcounted, Spotlight On California

The Bureau of Labor Statistics has cast a sobering light on the state of the U.S. job market through its preliminary benchmark revisions to total nonfarm employment for the year leading up to March 2023.

A downward revision of 306,000 payrolls has partially tempered the perception of unflagging robustness in the American labor market. The impact has been particularly pronounced in certain states.

Nearly 200,000 Jobs Vanished in California

California, the nation’s most populous state, as well as the one with the highest gross domestic product, has emerged as the hardest hit by the revisions, witnessing a substantial decline of 197,800 payrolls, on paper.

Following at a distance, Massachusetts suffered a revision of 38,900 payrolls, signaling a notable setback.

In contrast, some states have experienced an upbeat revision to their payroll estimates. Arizona and New Jersey stand out, both having their payrolls estimates upgraded by 32,500 and 13,700, respectively.

In terms of industry sectors, transportation and warehousing saw the largest downward revision (146,400), followed by professional and business services, down by 116,000. In contrast, payrolls in financial activities were revised higher by 47,000.

This preliminary benchmark revision serves to harmonize job data with the precise Quarterly Census of Employment and Wages (QCEW), derived from comprehensive state unemployment insurance records. The final benchmark revision will be issued in February 2024.

Industry analysts, including Daniel Silver of JPMorgan Chase & Co., had previously predicted that the preliminary benchmark revision by the BLS could potentially slash an astonishing 500,000 jobs from the count.

The average monthly creation of nonfarm payrolls reached 337,000 in the year preceding March 2023. However, this revision could potentially reduce the monthly figure by approximately 25,000.

In July 2023, the U.S. economy added 187,000 jobs, falling short of market expectations set at 200,000. This follows a revised downward figure of 185,000 jobs in June.

Read now: Mortgage Rates Climb To 7.31%, Highest in 23 Years: Shocking Chart Reveals Tremors in Housing Market

Photo: Shutterstock