The Bureau of Labour Statistics (BLS) has issued preliminary benchmark revisions to US non-farm payrolls for the 12 months ending March 2025, revealing that employment growth was significantly overestimated. Instead of the initially reported 1.758 million jobs added, the economy created only 847,000, a 911,000-job downward revision, exceeding market expectations of 682,000. This reduces average monthly payroll growth from 146,500 to 70,600.
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Sectors most affected include leisure and hospitality (-176k jobs), retail trade (-126k), and wholesale trade (-110k). The information sector had the largest percentage error, at -2.3% or 67,000 jobs.
The BLS attributes these discrepancies to data gaps, reporting errors by employers, and limitations in their "births-deaths" model, which tends to overstate jobs created by start-ups and undercount losses from failing small businesses—particularly during cyclical turning points.
According to James Knightley, Chief International Economist at ING, the revisions indicate that US labour market momentum is weaker than previously thought. Even modest upside surprises in upcoming inflation data are unlikely to prevent the Federal Reserve from initiating rate cuts next week, with further 25-basis-point reductions expected in October and December.
These findings reinforce the view that recent employment figures likely overstate the underlying health of the US labour market, signalling a more cautious outlook for growth and a clear signal for monetary easing.
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