U.S. Annual Nonfarm Payroll Revision Misses Expectations with 911,000-Job Cut, Heightening Fed Rate-Cut Pressure

The annual benchmark revision to U.S. nonfarm payrolls revealed a downward adjustment of 911,000 jobs—significantly worse than the market’s anticipated 682,000-job cut. In the lead-up to the release, economists had forecast revisions on the order of 800,000, and Treasury Secretary Bessent cautioned that the annual employment tally might fall by a similar magnitude. The outcome, however, surpassed even these bearish forecasts.

A sectoral breakdown showed widespread downward revisions across nearly all industries. Leisure and hospitality faced the largest cut at 176,000 jobs, followed by professional and business services at 158,000 and retail trade at 126,200. Manufacturing employment was also sharply revised lower. Only transportation and warehousing and utilities recorded modest upward adjustments. The private sector accounted for almost all of the revisions, while government payrolls were trimmed by 31,000 positions.

Prior to this revision, unadjusted government figures indicated that employers had added close to 1.8 million jobs over the year ending in March, averaging 149,000 new positions per month. Because most of the period covered by the annual update predates President Trump’s tariff measures, the data suggest the labor market was already weakening before those policies took effect.
Last year’s benchmark adjustment, spanning the 12 months through March 2024, initially showed an 818,000-job reduction before being revised to a 598,000-job cut in February 2025—the largest since 2009.

Unlike routine monthly revisions, which rely on fresh survey results, the annual benchmark update employs the Quarterly Census of Employment and Wages and state unemployment insurance tax records to provide a comprehensive restatement of payroll totals. While these adjustments do not affect the unemployment rate—derived from household surveys—they can significantly alter the trajectory of reported job growth.

The unusually large revisions in recent years have drawn attention from investors and Federal Reserve observers seeking clues about the pace of labor-market slowdown. Political figures have also weighed in. In July, following similarly stark cuts, President Trump dismissed BLS Director Erika McEntarfer and nominated E.J. Antoni of the Heritage Foundation. Yet August’s nonfarm report fell even further short of expectations and included a downward revision to June that showed a net loss of 13,000 jobs—the first monthly contraction since December 2020.

Despite political critiques, both monthly and annual revisions represent standard updates that incorporate more complete data. Economists attribute the outsized adjustments to post-pandemic distortions, including the “birth-death model” used to estimate net business formations and the exclusion of undocumented workers from unemployment insurance records.

Market participants interpreted the benchmark revision as confirmation of a cooling labor market and a potential springboard for Federal Reserve rate cuts as early as next week. Chair Jerome Powell has acknowledged rising labor-market risks, and two Fed officials signaled in July their openness to easing.

Although the benchmark data extend back up to 18 months, recent monthly nonfarm reports reinforce the trend of softening job growth. June through August averaged only 29,000 payroll additions per month, below the level needed to stabilize the unemployment rate.

Traders now assign a better-than-90% probability to a cumulative 75 basis points of fed-funds rate cuts by year-end, with the first cut widely expected at the conclusion of the Fed’s September 17 meeting.

In reaction, spot gold briefly retreated toward $3,640 per ounce—narrowing its intraday gain to roughly 0.3% after initially rising to $3,674.27 at 22:00 Beijing time. The yield on the U.S. 10-year Treasury rebounded from 4.0359% to near 4.07%, up about 2.5 basis points, while the two-year yield climbed above 3.51% from below 3.48%. The S&P 500 Index recovered from a low of 6,494.64 to reach an intraday high of 6,507.10, gaining approximately 0.2%.