Major downward revision to US job growth emphasises weakening employment market

Adding to the list of concerns surrounding the strength of the US employment market, the BLS' preliminary benchmark revision delivered a large downward adjustment to prior estimates of employment.

The BLS’ preliminary benchmark revision indicates a downward adjustment of 818k to total nonfarm payroll employment for March 2024.

Significantly, all of the downward revision was within the private sector, with total private employment revised lower by a preliminary 819k.

In percentage terms, the preliminary estimate is for a -0.5% revision to total nonfarm payrolls and a -0.6% revision to total private payrolls. This is well above the 10-year average revision of +/-0.1% of total nonfarm payrolls.

Source: US BLS

With the benchmark revision covering the period from April 2023 to March 2024 (the benchmark revision is heavily lagged), this implies that monthly average growth across both total nonfarm payrolls and total private payrolls, was 68k lower than initially reported.

This would point to monthly average job growth across April 2023 to March 2024 of 174k (from 242k) and average private nonfarm payroll growth of 118k (from 186k). The downward revision to private payroll growth is particularly significant and suggests that actual private payroll growth could be well below its current 6-month moving average of 160k.

The weak private payroll revision corresponds to the latest Business Employment Dynamics (BED) data, which shows that the quarterly pace of private employment growth has weakened significantly since 2Q23.

As a result of this weakening, the 6-month rolling average of private sector net job growth has plunged since 3Q23.

The same data suggests that the BLS’ monthly CES survey of total private nonfarm payrolls has failed to pick up on the full extent of this slowdown, with the rolling 12-month average of quarterly private payroll growth drastically diverging from 2H23.