BLS cuts US job gains by 60,000 after Fed rate hike

The US Bureau of Labor Statistics (BLS) revised its announced July and August job gains downward by 60,000. The earlier, more optimistic figures were factors in the Federal Reserve's September 16 interest rate hike. The BLS reported a gain of 21,000 jobs when the Fed voted in July, but the revised figure shows a loss of 10,000 jobs. The BLS also removed 29,000 jobs from its August estimate. Fed governors raised the benchmark interest rate for the first time in three years, making mortgages and credit more expensive. Fed governors had decided that the labor side of the Fed's congressional mandate was in good shape, allowing the Fed to focus on slowing inflation. The Fed's September 16 statement said job gains had kept pace with the workforce and the unemployment rate had changed little. Warsh told reporters in September that job openings and weekly hours had been increasing. Warsh's statement was based on inaccurate data indicating that the US economy was largely consistent with full employment. UBS said market odds of an interest rate hike rose from 50% to 60% after August's initially optimistic job openings report. Already expensive mortgages and credit would become more expensive as benchmark interest rates continued rising. US employers added only 29,000 jobs in September against a forecast of 84,000. The unemployment rate rose to 4.2%. Jefferies' chief US economist said the August increase appeared to be nothing more than a rebound from very weak hiring in June and July. Financial blogger ZeroHedge argued that the Fed would not have raised interest rates if the Fed had accurate data. The BLS attributed the downward revisions to additional business and government reports and seasonal recalculations. The lower figures reflect more accurate information. After September's interest rate increase, 16 of 18 Federal Open Market Committee members expected to raise rates again before the end of the year. That forecast is now under scrutiny following the BLS revisions.