Revised figures show annual U.S. job growth was much lower than previously reported

U.S. job growth was probably far less robust in the year through March than previously reported, according to government data out Wednesday.

The number of workers on payrolls will likely be revised down by 818,000 for the 12 months through March — or around 68,000 less each month — according to the Bureau of Labor Statistics’ preliminary benchmark revision. It was the largest downward revision since 2009.

While economists largely anticipated a decline, some predicted a loss of up to 1 million jobs. The final figures are due early next year.

Before the report, the BLS’s initial payrolls figures indicated employers added 2.9 million total jobs in the period, or an average of 242,000 per month. Now the monthly pace is more likely to be around 174,000, assuming the change is distributed proportionately, still a healthy rate of hiring but a moderation from the post-pandemic peak.

Benchmark revisions are done every year, but they were particularly scrutinized this year by markets and Federal Reserve watchers for any signs that the labor market may be cooling faster than originally reported.

Several economists said the initial payroll data may have been affected by a number of factors, including adjustments for the creation and closure of businesses and how unauthorized immigrant workers are counted.

The revisions may reignite angst among markets and economists that the labor market is deteriorating much faster than originally thought. The July jobs report set off alarm bells with a weak pace of hiring and a fourth month of rising unemployment, but other metrics like jobless claims and vacancies suggest a more moderate slowdown.

The figures are likely to fuel concerns that the Federal Reserve is behind the curve in lowering interest rates.

Wednesday’s data will help shape Fed Chair Jerome H. Powell’s latest assessment of the labor market ahead of a speech Friday at the central bank’s annual symposium in Jackson Hole, Wyo. Policymakers have recently turned their attention to the labor side of their dual mandate now that inflation has come down from its pandemic peak.

Professional and business services accounted for nearly half of the downward revision. Other industries were also marked lower, including leisure and hospitality, manufacturing and retail trade.

The BLS compiles each monthly employment report from two surveys. The Wednesday revisions pertain to payrolls — which are gathered through a survey of businesses — and don’t affect the unemployment rate, which is derived from a survey of households.

Once a year, the BLS benchmarks the March payrolls level to a more accurate but less timely data source called the Quarterly Census of Employment and Wages that’s based on state unemployment insurance tax records and covers nearly all U.S. jobs.

QCEW figures were also released Wednesday, and showed a 1.3% increase in employment in the year through March 2024. That compares with a 1.9% annual gain as measured from the initial monthly payrolls data.

Wednesday’s revisions apply to the total level of payrolls in March 2024 compared to the prior year. The final numbers, which are released with the January 2025 employment report, will break out the revisions by each month.

For most of the recent years, initial monthly payroll data have been stronger than the QCEW figures. Some economists attribute that 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 that might be off in the post-pandemic world.

Others have argued there’s another reason behind that discrepancy: immigration. Because the QCEW report is based on unemployment insurance records — which undocumented immigrants can’t apply for — the data are likely to have stripped out up thousands of unauthorized workers that were included in the initial payroll estimates.