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The U.S. labor market added 911,000 fewer jobs in the 12-month period that ended March 2025 than had earlier been reported, the Bureau of Labor Statistics on Tuesday. The major downward revision signals that the labor market was slowing more last year than had earlier been reported.
The so-called preliminary benchmark revision, produced annually by the BLS, was bigger than a decline of roughly prior to the release. The revision aims to better account for businesses that have opened or closed in the 12-month period it covers, as these changes are sometimes missed by the BLS' monthly jobs report.
The downward revision comes as the labor market appears to be ailing, with Friday's sending warning signals about the pace of hiring across the U.S. At the same time, the BLS is in the crosshairs of the Trump administration, with the president last month of the monthly jobs report after the data included a significant downward revision, prompting him to of the BLS.
Revisions are a normal part of the statistical process at the BLS, economists note. That's because the monthly jobs data is based on a survey of businesses, and some companies respond after the agency's initial jobs report has been issued. Because of that, the BLS updates its data to reflect the new information.
The sharp downward annual revision signals that the job market was facing bigger headwinds in 2024 and early 2025 than earlier reported, and could add to the Federal Reserve's case for cutting its benchmark rate at its Sept. 17 meeting, economists said.
"Today's data suggests cooling in the labor market is more dramatic than previously thought," said Elizabeth Renter, senior economist at NerdWallet, in an email.
She added, "This strengthens the likelihood that the Fed will cut rates next week, as it's additional evidence that the labor market side of the dual mandate needs some attention."
With the new revisions, job growth in 2025 has averaged 44,000 per month, down from 75,000 prior to the revamped numbers, Bill Adams, chief economist for Comerica Bank, said in an email. In 2024, payroll gains factoring in the revisions averaged 106,000, down from 168,000 previously.
"The revision shows the economy entered 2025 with less momentum than previously understood," he said. "It's now a lock that the Fed will cut interest rates at their meeting next week and that further rate cuts will follow in the months ahead. The question is by how much."
The probability of a 0.25 percentage point rate cut at the Fed's Sept. 17 meeting is now projected at 94%, according to economists polled by financial data firm FactSet.
The annual revisions are based on fresh data from the Quarterly Census of Employment and Wages (QCEW), which tracks employment and wages reported by employers that cover more than 95% of U.S. jobs, or about 11 million workplaces.
The QCEW tracks when businesses open or close, something that is difficult for the monthly jobs report to track. For instance, if a business doesn't respond to the monthly survey, the BLS doesn't immediately know if the company simply isn't responding or if it has shut down.
The large revision is likely due to the QCEW's tracking of businesses that have either been newly created or recently closed, with some of those new companies likely having slower hiring than the BLS had earlier estimated, Pantheon Macroeconomics chief U.S. economist Samuel Tombs said in a research note.
"Probably about two-thirds of the downward benchmark revision looks set to be due to weaker job creation at new firms than the BLS initially inferred from its model," he said.
