Job growth in the US during the year leading up to March turned out to be softer than previously estimated, adding to evidence that the labor market continues to cool. This trend is a factor that could still encourage the Federal Reserve to lower interest rates in 2025, even as inflation remains persistently elevated.

The Bureau of Labor Statistics released its preliminary annual benchmark revision to nonfarm payrolls on Friday, indicating that employment figures might be revised down by 79,000, or 0.1%. This contrasts sharply with the median estimate from a media survey of economists, which had projected an upward revision of 183,000 jobs. A final revision will be published early next year.

Prior to the release of this initial report, government data had shown a seasonally unadjusted gain of 211,000 jobs for the twelve months ending in March, or an average monthly increase of 17,600. This preliminary benchmark revision suggests that the actual average monthly gain during that period could be closer to 11,000. Notably, this marks the seventh time in the past eight years that the initial benchmark revision has lowered the employment estimates.

Even with this adjustment, the latest figures indicate that the US labor market remains broadly in balance—businesses are showing little urgency to hire new workers, but they are also not rushing to lay off existing staff. Private sector employment for the year through March was revised down more substantially by 178,000 jobs, reflecting weakness in retail trade, education and health services, manufacturing, and business services. Conversely, job numbers were revised upward in transportation and warehousing, information, financial activities, and construction. Government payrolls also saw an upward revision.

Data Calibration: The BLS calibrates its March payroll figures each year against a more accurate, albeit less timely, data source known as the Quarterly Census of Employment and Wages, which is based on state unemployment insurance tax records and covers nearly all US jobs. This new information helps enhance the accuracy of employment data, and the benchmarking process has drawn increasing scrutiny in recent years.

Last year's preliminary benchmark revision resulted in the largest downward adjustment to employment estimates on record, reigniting criticism from the White House toward the statistical agency. About a month before the release of this year's preliminary benchmark revision, President Donald Trump dismissed the head of the agency following another monthly jobs report that showed weak employment growth.