The latest Jobs Report appeared rosy on the surface, but revisions painted a far more concerning picture of a weak labor market.
Nonfarm payrolls increased by 130,000 jobs in January comprised of 172,000 private jobs added and a loss of 42,000 government jobs – that’s the good news. However, this number should be taken with a grain of salt as the initial report for January 2025 showed 143,000 jobs added – that figure has now been revised to show a loss of -48,000 jobs.
Today’s report contained two sets of revisions. Adjustments for each month in 2025 and a benchmark revision for March 2024 to March 2025.
Looking back to 2025, every month other than October was adjusted downward resulting in -403,000 fewer jobs added over the year than previously reported.
Looking even further back, the benchmark revision that came out this morning showed -898,000 fewer jobs were added from March 2024 through March 2025 than previously reported. The only other downward annual benchmark revision that was larger occurred in 2009, in the depths of the Great Financial Crisis. As shown in the graph below, significant negative adjustments typically occur in recessions as the labor market is deteriorating faster than statistical models imply. This confirms that the job market has been far weaker than reported for quite some time – a concerning development for the U.S. economy.
With all revisions included from the prior two years nonfarm payrolls are now -1,029,000 lower than initially reported. So even though the headline figure for the latest Jobs Report seemed like a positive surprise…
January jobs report smashes expectations as payrolls grow by 130,000
Yahoo!Finance
…don’t hang your hat on the idea of a strong labor market to start the year.