US Payroll Revisions Show Job Losses Weakening Fed Hike Case
The US Bureau of Labor Statistics (BLS) released revised payroll data on October 2, significantly adjusting job gains for July and August. The revision lowered the previously reported July jobs gain of 21,000 to a loss of 10,000, while August’s payroll growth was reduced from 162,000 to 133,000. These changes, totaling a 60,000-job downward adjustment, weaken the argument for further Federal Reserve interest rate hikes, potentially easing pressure on Bitcoin.
The September employment report showed payroll growth at 29,000. Additionally, average hourly earnings for private nonfarm payrolls rose 0.1% monthly and 3.0% annually, below the earlier reported figures of 0.3% and 3.1% for August. The revised data suggests a softer labor market, which could influence the Fed’s monetary policy decisions.
The Fed had previously raised interest rates to a 3.75%, 4% target range on September 16, citing strong job gains and elevated inflation. The new payroll figures present a less robust labor picture, reducing the need for tightening policy to curb labor demand. However, inflation remains a concern, with August’s personal consumption expenditures (PCE) inflation running at 3.4% annually, or 3.0% excluding food and energy, both above the Fed’s 2% target.
For Bitcoin, a softer labor market could mitigate the risk of higher discount rates, which may impact speculative assets. A 2023 study by the New York Fed found that Bitcoin was largely unresponsive to monetary and macroeconomic surprises. Meanwhile, the household survey showed employment rising by 406,000, with participation increasing from 61.6% to 61.8%, and unemployment edging up from 4.1% to 4.2%.
The mixed data complicates interpretations of the labor market, limiting both recession declarations and claims of a decisive employment rebound. Weaker payrolls suggest caution in further tightening, while household figures prevent treating the report as evidence of an employment slump. The next jobs report is scheduled for November 6.