The U.S. labor market added 911,000 fewer jobs than earlier reported, BLS says
The Bureau of Labor Statistics (BLS) recently announced a significant downward revision in the U.S. labor market, revealing that 911,000 fewer jobs were added in the 12-month period ending March 2025 than previously reported. This revision indicates that the labor market was experiencing a more pronounced slowdown than initially thought.
The annual preliminary benchmark revision, conducted by the BLS, exceeded economists’ expectations of a decline of around 800,000 jobs. This revision aims to capture the openings and closures of businesses that may have been missed in the monthly jobs report. The revised data underscores the challenges faced by the labor market, with the August jobs report pointing to a sluggish pace of hiring nationwide.
The timing of this revision is critical as the Federal Reserve considers potential interest rate cuts at its upcoming meeting. Economists believe that the revised data strengthens the case for a rate cut, given the apparent weakening of the job market. Elizabeth Renter, a senior economist at NerdWallet, noted that the cooling labor market necessitates attention from the Fed, aligning with its dual mandate of maintaining stable employment and price levels.
The revised numbers reveal a notable deceleration in job gains, with average monthly growth in 2025 dropping to 44,000 from the previously reported 75,000. In 2024, the average monthly payroll gains, factoring in the revisions, decreased to 106,000 from 168,000. This downward momentum suggests that the economy entered 2025 with less vigor than previously understood, prompting expectations of further rate cuts from the Fed in the coming months.
The revision process draws on data from the Quarterly Census of Employment and Wages (QCEW), which provides a comprehensive view of employment and wages across the country. By tracking business openings and closures, the QCEW offers insights that may not be captured in the monthly survey. The large downward revision is attributed to slower job creation at new firms, indicating a more challenging environment for hiring than initially projected.
As the Fed prepares for its September 17 meeting, the likelihood of a 0.25 percentage point rate cut stands at 94%, according to economists polled by FactSet. The revised data underscores the need for proactive monetary policy to support the labor market and bolster economic growth. The upcoming decisions by the Federal Reserve will be closely watched as they navigate the evolving landscape of the U.S. economy.
