U.S. Job Growth Revised Downward, Adding Pressure on the Dollar and Federal Reserve

A recent revision by the Bureau of Labor Statistics revealed that U.S. job growth for the year ending March 2024 was significantly weaker than initially reported, with 818,000 fewer jobs added—a downward adjustment not seen since 2009. This substantial revision suggests that the labor market has cooled more rapidly than previously anticipated.

The revised data is likely to heighten concerns that the Federal Reserve has been too slow in lowering interest rates. During its July meeting, Fed officials discussed the possibility of a rate cut but chose to delay, hinting at a potential move in September. Markets are now anticipating this September rate cut, which would be the first since the emergency actions taken during the early stages of the COVID-19 crisis.

Meanwhile, the dollar has come under pressure, with sustained selling driving it to new yearly lows against several major currencies, including the pound. Federal Reserve officials had previously noted that “reported payroll gains might be overstated,” suggesting that the Fed may be strategically timing its rate cuts, potentially staying ahead of market expectations.