In latest US payroll figures, 911,000 was a record
The growth of jobs in the US during the year leading up to March was significantly weaker than earlier estimates indicated, intensifying the pressure on the Federal Reserve to consider reducing interest rates. The government’s preliminary benchmark revision released on Tuesday indicates that the number of workers on payrolls will likely be adjusted downward by a record 911,000, or 0.6%. The final figures are expected to be released early next year. Prior to the report, the government’s payrolls data revealed that employers added almost 1.8 million total jobs in the year leading up to March on a non-seasonally adjusted basis, averaging 149,000 per month.
The revision indicated that average monthly job growth was approximately half of that figure. The Bureau of Labor Statistics adjustment reveals that the labor market has experienced a slowdown in recent months, following a prolonged phase of more moderate job growth. This trend may set the stage for a series of interest-rate cuts starting next week. Fed Chair Jerome Powell recently acknowledged that risks to the job market have increased, while two of his colleagues expressed a preference for lowering borrowing costs in July. “The labor market was materially weaker than the BLS initially estimated in the year to March 2025, giving the Fed another reason to lower rates next week,” said Sal Guatieri. Payrolls experienced reductions across almost all industries and the majority of states. Payrolls at wholesale and retail establishments were the primary contributors to the downward revision, with leisure and hospitality following closely behind. Professional and business services, along with manufacturing, were also significantly reduced.
Benchmark revisions are conducted annually, but this year they have attracted heightened scrutiny as investors and Fed observers seek any indications that the labor market might be decelerating more rapidly than earlier assessments suggested. Significant revisions to monthly employment figures incited anger at the White House and resulted in President Donald Trump’s termination of the BLS director in August. Last year, he targeted former President Joe Biden, questioning the integrity of his administration and its economic record following a similarly significant downward revision in the 2024 preliminary benchmark revision. The final revision for 2024 turned out to be less severe than initially suggested in the preliminary findings, yet it remains the largest adjustment since 2009.
Despite Trump’s criticisms of the revisions, the monthly and benchmark adjustments are integral to the standard procedure of refining estimates as additional data is obtained. Adjustments have been more significant than in previous years, a phenomenon that some economists link to the distinctive dynamics following the pandemic. Numerous economists indicated that the preliminary payrolls data could have been influenced by various factors, such as modifications for business openings and closures, as well as the methods used to account for unauthorized immigrant workers. The BLS gathers data for its monthly employment report through two distinct surveys. The benchmark revisions relate to payrolls, which are collected via a survey of businesses. The unemployment rate remains unaffected, as it is based on a survey of households. Annually, the BLS benchmarks the March payrolls level to a more precise yet less current data source known as the Quarterly Census of Employment and Wages, which relies on state unemployment insurance tax records and encompasses nearly all jobs in the US.
The initial estimate pertains to the overall payroll totals for March 2025. The final numbers, set to be released alongside the employment report next February, will detail the revisions for each month. In recent years, initial monthly payroll data have consistently outperformed the QCEW figures. Some economists attribute this in part to the so-called birth-death model — an adjustment the BLS makes to the data to account for the net number of businesses opening and closing, but which may be inaccurate in the post-pandemic world. Some have suggested that there is an additional factor contributing to that discrepancy: immigration. The QCEW report relies on unemployment insurance records, which undocumented immigrants are ineligible to apply for. Consequently, the data likely excludes thousands of unauthorized workers that were part of the initial payroll estimates.
