US job growth through March expected to be revised down sharply

By Lucia Mutikani

WASHINGTON, Sept 9 (Reuters) - The level of U.S. employment for the 12 months through March could be slashed by as many as one million jobs when the government publishes its preliminary nonfarm payrolls benchmark estimate on Tuesday, economists predicted.

The payrolls benchmark revision would come on the heels of news last Friday that job growth almost stalled in August and the economy shed jobs in June for the first time in 4-1/2 years. It would suggest the labor market was already struggling before President Donald Trump's aggressive tariffs on imports. An immigration crackdown by the White House has undercut labor supply, while a shift by businesses to artificial intelligence tools and automation is curbing demand for workers.

"The slowdown in job growth is less about a sudden collapse and more about a gradual recalibration by businesses facing technological change, higher financing costs, and uncertain policy signals," said Sung Won Sohn, a finance and economics professor at Loyola Marymount University.

"The era of easy job gains is over. The economy is entering a more complex and uneven phase of adjustment."

Economists estimated that the Labor Department's Bureau of Labor Statistics could revise down the level of employment from April 2024 through March 2025 by between 400,000 and 1 million jobs.

The estimate is based on the Quarterly Census of Employment and Wages (QCEW) data from the second quarter through the fourth quarter of 2024. QCEW data for the first quarter of 2025 will be published together with the payrolls estimate.

The level of employment for the 12 months through March 2024 was revised down by 598,000 jobs.

"If the downward revisions are closer to the higher end of our estimate range at 1 million ... that would suggest the labor market had already nearly stalled in the first quarter of 2025, before the trade uncertainty shock," said Shruti Mishra, an economist at Bank of America Securities.

'BIRTH-AND-DEATH' MODEL FAULTED

Economists saw little impact on monetary policy, with the Federal Reserve expected to resume cutting interest rates next Wednesday after pausing its easing cycle in January because of uncertainty over the economic impact of tariffs.

The monthly employment report is based on data derived from the Current Employment Statistics (CES) program, which surveys about 121,000 businesses and government agencies, representing about 631,000 individual worksites. The QCEW data is derived from reports by employers to the state unemployment insurance programs, and represents about 95% of total employment.

A final benchmark revision will be released in February along with the BLS' report on employment for January.

Sharp downgrades to May and June employment totaling 258,000 jobs angered Trump last month, who fired BLS Commissioner Erika McEntarfer, accusing her, without evidence, of faking the employment data. Trump has nominated E.J. Antoni, who has penned opinion pieces critical of the BLS and even suggested suspending the monthly employment report. Antoni is viewed as unqualified by economists across political ideologies.

The National Association for Business Economics on Monday urged "policymakers, business leaders, and the economics community to stand with BLS and ensure that America's statistics remain accurate, independent, and trusted worldwide."

Economists have attributed the revisions to the 'birth-and-death' model, a method the BLS uses to try to estimate how many jobs were gained or lost because of companies opening or closing in a given month. These companies are not initially available for sampling.

"The average monthly contribution of the birth-death factor slipped in the 12 months ending March 2025 and is nearly back in line with its pre-pandemic contribution," said Sarah House, a senior economist at Wells Fargo.

"Yet, this comes as separate data on business openings show the rate of net new firm creation has fallen below its pre-pandemic pace. Therefore, we still see scope for the birth-death factor to be overestimating job growth at firms outside the survey sample."