Employment growth may have been significantly weaker than expected, data are being revised

In the US, employment growth through March is expected to have been much weaker than expected. This could lead to calls for even deeper interest rate cuts amid concerns that the US Federal Reserve may have waited too long to begin its easing cycle.

The Bureau of Labor Statistics is expected to release a preliminary benchmark revision to wage growth for the 12 months ending March at 10 a.m. ET on Wednesday.

Economists at Wells Fargo expect the figure to be at least 600,000 lower than originally estimated. JPMorgan expects a decline of around 360,000, while Goldman Sachs expects up to a million.

Given the Fed's dual mandate to promote maximum employment and stable prices, the revision could have implications for Fed Chairman Jerome Powell's speech in Jackson Hole on Friday.

A sharp downward revision “could reignite concerns about weaker employment,” said Charu Chanana, head of foreign exchange strategy at Saxo. “That's something Powell may have to address, and if the September 6 jobs report shows significant weakness, that could strengthen the case for a 50 basis point rate cut.”

“The revision should not change our views on the current labour market too much, as the direction and general magnitude of this revision have been known for some time. However, a particularly bad revision would strengthen the case for easing,” said Peter Williams of 22V Research.

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