The U.S. government said it overstated job growth by 911,000 in the year through March 2025, raising fresh doubts over the strength of the labor market and offering statistical proof that job growth had been overestimated for much of last year.
The Bureau of Labor Statistics released its annual preliminary benchmark revision Tuesday, cutting previously reported nonfarm employment gains by 911,000 jobs.
The revision, based on more complete state-level tax records, brings the average monthly job creation figure for April 2024 through March 2025 down to just 71,000, from a prior estimate of 147,000.
This marks the largest annual payroll revision in U.S. history, surpassing even the 902,000 downward adjustment during the depths of the Great Financial Crisis.
What Industries Were Hit The Hardest?
The revision shows broad weakness across sectors, with private sector jobs slashed by 880,000, or 0.7%. Trade, transportation and utilities were among the worst-hit categories, losing a combined 226,000 jobs.
Retail trade alone saw a downward revision of 126,200 jobs, while the leisure and hospitality sector was cut by 176,000.
Manufacturing employment was revised lower by 95,000 jobs, a decline of 0.8%, and professional and business services lost 158,000 jobs, or 0.7%. The information sector posted the steepest percentage drop, with a 2.3% revision, totaling 67,000 fewer jobs than initially reported.
Only transportation, warehousing and utilities showed modest upward adjustments, offering the lone bright spots in an otherwise downbeat report.
Wall Street Reacts
Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the worsening jobs picture could "make it easier for the Fed to cut rates this fall," but also noted that it might "throw some cold water on the recent rally."
He warned that if inflation data due Thursday shows acceleration, the market may start pricing in a stagflation scenario—a toxic mix of slowing growth and rising prices.
Heather Long, chief economist at Navy Federal, said the numbers imply the job market had already stalled before key economic shocks like tariffs hit earlier this year.
"That means the labor market was weak even before the tariffs kicked in. The job market was mostly frozen in 2024, too," she said.
Peter Schiff added that the new data invalidates much of the optimism seen over the past year. "Another 911,000 previously reported job gains were just revised away,” he said.
Markets reacted swiftly to the news. The S&P 500 – as tracked by the Vanguard S&P 500 ETF VOO – fell 0.3% to 6,480, while the Nasdaq 100 lost 0.4%, slipping to 23,700.
Investors are now pricing in increased odds of a rate cut by the Federal Reserve this fall, as the weakening labor market offers room for easing.
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