The US had 818,000 fewer jobs in March than projected, the US Bureau of Labor Statistics reported today. Nearly half the revised decline, 358,000, was in the “professional and business services” industry which includes temporary staffing.

New data released today by the BLS is a preliminary estimate of its upcoming annual benchmark revision. A final revision will be issued in February 2025. The March number is benchmarked annually with the revisions based on state unemployment insurance tax records.

Bloomberg reported it was the largest downward revision since 2009.

Before the report, the BLS’s initial payrolls figures indicated employers added 2.9 million total jobs in the period, or an average of 242,000 per month, Bloomberg reported. However, the monthly pace is now more likely to be around 174,000, assuming the change is distributed proportionately. This still represents a healthy rate of hiring, though it’s down from the post-pandemic peak.

SIA Economist Michael Schultz cited several takeaways from the preliminary estimate:

• The bureau’s Current Employment Statistics Survey/Establishment Survey had overestimated the employment level by 818,000, suggesting monthly growth was overstated by roughly 68,000 on average for the 12 months ending March 2024.
• This also raises a question of whether the CES continues to overestimate employment and employment growth through the current figures for July 2024.
• This raises the likelihood of additional or faster monetary policy easing.
• Given concentration in the professional and business services sector — which contains the temporary help services industry — we may want to anticipate further downward revisions to the industry’s employment size when the revised benchmarks are fully implemented in the February 2025 Jobs Report covering January 2025 employment data.

“Overall, the revisions as indicated in this preliminary re-benchmarking are concentrated in a few sectors, with close to 44% concentrated in the professional and business services sector, of which temporary help services is one component industry,” Schultz wrote in a note. “That concentration of preliminary downward revision could see the temporary help industry figures revised down meaningfully when the January 2025 employment figures are released and the benchmark revision finalized.”

Schultz continued, “However, the temporary help industry ranges between 10% and 15% of total employment in the professional and business services sector, and employment in the sector, outside temporary help, has held up — so maybe the revision brings other industries within the sector closer to the weakness temporary help has seen instead of being evenly distributed across the sector’s components.”

Chance of Interest Rate Cuts

Julia Pollak, chief economist at ZipRecruiter, said in a statement to SIA, that the revised data suggests the labor market deterioration started earlier and has already gone further.

“Federal Reserve members have frequently based their assessments of the labor market on two data series (payrolls and job openings) which have been outliers to the upside,” Pollak said. “Closely related data series (e.g., household employment estimates in the case of payrolls, and hires and quits in the case of job openings) have been substantially weaker for months and have raised doubts among labor economists about the resilience of the labor market. The revisions today add fuel to concerns that the labor market may have deteriorated more meaningfully than the Fed has suggested.”

The downward revisions to payrolls should raise the chance of interest rate cuts in the coming months, she said.

(Bloomberg contributed to this story.)