The U.S. economy experienced a downward revision of 818,000 non-farm payrolls between April 2023 and March 2024, according to government data released Wednesday.

This adjustment represents a 0.5% decrease in overall job gains for the year, a greater fall than major U.S. investment banks like Goldman Sachs and JPMorgan Chase were anticipating.

Job figure revisions typically fall within a range of negative 0.3% to positive 0.3%. The last significant revision occurred in 2009, with a reduction of approximately 900,000 jobs or a 0.7% decrease.

Initial government estimates signaled 2.9 million job additions from April 2023 to March 2024, averaging around 242,000 jobs per month. Following the revision, the average monthly job gains dropped to 175,000.

The revision affected various sectors, with private payrolls revised downward by 819,000. The largest declines were seen in professional and business services (-358,000), leisure and hospitality (-150,000), retail trade (-129,000) and manufacturing (-115,000).

Conversely, there were upward revisions in private education and health services (+87,000) and transportation and warehousing (+56,400). Government payrolls saw a minimal upward revision of 1,000 jobs.

Market Reactions

The revised employment data signaled to market participants the U.S. labor market is weaker than previously believed.

In response, expectations for interest rate cuts increased, with investors concerned the economy may already be cooling. As a result, the market-implied probability of a 50-basis-point rate cut in September surged to 32.5%, according to CME Group‘s FedWatch tool.

Traders fully discount a full percentage point of rate cut by year-end.

The U.S. Dollar Index, as tracked by the Invesco DB USD Index Bullish Fund ETF , weakened. Treasury yields were slightly lower.

Stocks rallied further amid increased expectations for lower interest rates. The tech-heavy Invesco QQQ Trust was up by 0.7% at 10:45 a.m. in New York.

Robust gains were also seen in the S&P 500, as monitored through the SPDR S&P 500 ETF Trust ( SPY ) , up 0.5%, and in small caps, as tracked by the iShares Russell 2000 ETF ( IWM ) , up 0.6%.

Markets now await minutes from the latest July Federal Open Market Committee meeting, scheduled for release at 2 p.m. ET.

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