On Tuesday, the U.S. government reported that the economy likely generated 911,000 fewer jobs from March last year to March this year than previously estimated, indicating a slowdown in job growth even before President Trump’s import tariffs were intensified.
This preliminary annual benchmark revision from the Labor Department’s Bureau of Labor Statistics (BLS) follows recent reports that job growth nearly stalled in August, with job losses in June marking the first decline in over four years.
The revised estimates suggest that nonfarm payrolls grew by an average of 71,000 jobs per month, down from the earlier estimate of 147,000.
Economists had projected the revision to range between 400,000 and 1 million jobs, with the employment level for the year up to March 2024 reduced by 598,000 jobs.
“This shows that the labor market is losing momentum from an even weaker starting point than previously believed,” stated James Knightley, chief international economist at ING.
Beyond trade policy uncertainties, labor market pressures have also been exacerbated by the White House’s crackdown on immigration, reducing labor supply, and a business shift towards artificial intelligence and automation, which decreases the demand for workers.
Annually, the BLS aligns its nonfarm payroll data, gathered from employer surveys, with the comprehensive unemployment insurance tax record database, the Quarterly Census of Employment and Wages (QCEW).
The final benchmark revision is set for release in February alongside the BLS report for January. This final count will adjust payroll data for months around March.
Revisions show leisure and hospitality jobs may decrease by 176,000, trade, transportation, and utilities might lose 226,000, and professional and business services could drop by 158,000 positions.
Manufacturing jobs might be reduced by 95,000, and government jobs could see a decline of 31,000. Economists anticipate the Federal Reserve to cut interest rates by a quarter point next Wednesday, resuming after a pause in January due to tariff impact uncertainties.
‘ACCURATE, INDEPENDENT AND TRUSTED’
The monthly employment report derives from the CES program, surveying about 121,000 businesses and agencies, covering 631,000 worksites. The QCEW data, based on employer reports to state unemployment insurance, accounts for 95% of total employment.
Last month’s significant downward revisions for May and June, totaling 258,000 jobs, led to Trump’s dismissal of BLS Commissioner Erika McEntarfer, accusing her, without evidence, of faking data.
Trump has nominated E.J. Antoni, known for his critical opinions of the BLS, to replace McEntarfer, but economists widely regard Antoni as unqualified.
Labor Secretary Lori Chavez-DeRemer attributed the revisions to previous administration failures under Biden, citing outdated practices that compromised the system’s reliability.
The BLS, like similar agencies, suffers from underfunding across both Democratic and Republican administrations.
“Political retaliation from today’s release will damage BLS’s ability to provide timely, unbiased statistics,” stated Elise Gould, a senior economist at the Economic Policy Institute.
The National Association for Business Economics urged support for the BLS to maintain accurate, independent, and globally trusted U.S. statistics.
Economists link the revisions to the “birth-and-death” model, which the BLS uses to estimate job changes from business openings or closures, initially unsampled.
“The birth-death model still overestimates payroll growth,” noted Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “Small business credit is costly, and tariffs add financial strain. We expect future findings to again overstate job creation at new businesses.”
