Major jobs revision Tuesday could show the labor market is weaker than previously thought

The most recent job report indicates that the labor market is experiencing a slowdown, but this downward trend may have started much earlier than anticipated. Economists are anticipating a significant downward revision from the Bureau of Labor Statistics (BLS) in their upcoming release, which is expected to show that the country added hundreds of thousands fewer jobs than initially reported.

Scheduled for release on September 9, the BLS will unveil its preliminary benchmark revision to labor market data. This revision aims to provide a more accurate account of businesses that have either opened or closed within the 12-month period leading up to March 2025. Experts predict that this revision could reveal that job growth during this time was actually around 800,000 jobs lower than previously indicated.

The upcoming report is likely to attract attention from the Trump administration, especially in light of the President’s recent skepticism towards the monthly jobs report. In fact, the President even dismissed the BLS commissioner after a significant downward revision in the data. The job market appears to be stagnating as businesses grapple with increased tariff costs and turn to artificial intelligence to cut labor expenses and potentially replace workers.

Economists like Bill Adams, the chief economist for Comerica Bank, foresee a bleaker outlook for the labor market following the release of the preliminary benchmark revision on September 9. Adams estimates that the revision could reveal a reduction of approximately 775,000 jobs over the 12-month period ending in March. This would suggest that the average monthly job growth in 2024 was actually at 100,000 per month, significantly lower than the previously reported 165,000.

It’s important to note that this revision will only cover the first three months of President Trump’s second administration, with most of the timeframe falling within the last year of former President Biden’s term. Job growth has dramatically slowed in recent months, with employers adding an average of 29,000 jobs each month from June through August, according to the latest BLS data.

The government revises its jobs data regularly to reflect more recent information received from businesses about hiring trends. While monthly revisions occur to incorporate new data from late survey responses, the BLS also conducts an annual revision based on fresh information from the Quarterly Census of Employment and Wages (QCEW), which tracks employment and wages reported by a majority of U.S. employers.

The last annual revision saw a major downward adjustment, revealing that employers added 818,000 fewer jobs in the 12 months ending in March 2024 than initially estimated. This revision lowered the average monthly job growth for that period to 174,000 from the original 242,000.

As the Federal Reserve assesses recent economic data, such as the forthcoming September jobs report and the Consumer Price Index (CPI) due on September 11, economists anticipate a rate cut at the Fed’s September 17 meeting. The labor market slowdown in recent months has heightened expectations for a rate cut, with the only uncertainty being the magnitude of the cut, whether it be a standard 0.25 percentage points or a more aggressive 0.5 percentage points.

President Trump has been vocal about his dissatisfaction with Fed Chair Jerome Powell’s decision to maintain interest rates. In August, Trump nominated E.J. Antoni, a fellow at the Heritage Foundation, as the new commissioner of the BLS. Antoni, who has criticized the BLS in the past, has been met with mixed reactions from the economic community.

In light of these developments, the National Association for Business Economics (NABE) has expressed support for the BLS and its dedicated staff, urging policymakers and industry professionals to defend the integrity of the U.S. statistical system. The appointment of a knowledgeable and impartial commissioner is crucial in upholding the agency’s mission and ensuring the credibility of U.S. statistics.

In conclusion, the upcoming revision of labor market data is expected to reveal a significant downward adjustment in job growth, highlighting the challenges facing the U.S. economy. As policymakers and economists navigate these uncertain times, the integrity of statistical data and the independence of key institutions like the BLS remain paramount in maintaining public trust and informed decision-making.