Editor’s note: This story has been updated to correct a reference to January 2025 in comments from Comerica Bank’s chief economist.

The Federal Reserve has every reason to cut interest rates at its next meeting in September since the U.S. revised its jobs report, according to economists.

“A weaker-than-expected job market could pave the way for the Fed to cut by a half percentage point in September,” said Jeffrey Roach, chief economist for LPL Financial.

The Fed can effectively temper wage pressures and, consequently, inflation when job growth slows.

The Bureau of Labor Statistics revised job growth between March 2023 and March 2024 down a cumulative 818,000 in benchmark revisions released on Wednesday.

Roach said the industries with the largest negative revisions were the professional services and hospitality sectors, while transportation and warehousing industries are expected to be revised higher.

“It's not surprising that the Leisure and Hospitality sector is the most volatile,” he said. “The revision implies job growth in the year through July was closer to 164,000 than the 209,000 recorded in the August 2 release of the July jobs report.”

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The revised jobs report showed that the job market is weak across the U.S., not in just isolated pockets, said Bill Adams, chief economist for Comerica Bank.

“It showed the month's weak job growth wasn't just in Texas, where Hurricane Beryl caused huge disruptions to the economy of metro Houston and surrounding areas,” he said.

“Employment also fell in Missouri, and unemployment rose in a number of states on the Eastern seaboard, the Midwest, and the High Plains.”

As such, Comerica expects the Fed to lower interest rates by a full percentage point between now and the end of January 2025 by cutting them by a quarter percentage at the September, November, December, and January meetings.

“Financial markets price in the Fed cutting interest rates by somewhat more than that between now and January,” he said.

The revised jobs report does not take away that the U.S. economy is still doing pretty well, said Robert Frick, corporate economist with the Navy Federal Credit Union.

"The revisions aren't a shock, given the estimates were for one million fewer jobs," he said in a note obtained by Bloomberg. "This doesn't challenge the idea we're still in an expansion, but it does signal we should expect monthly job growth to be more muted and put extra pressure on the Fed to cut rates."

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