Recent U.S. jobs gains weren’t as strong as they initially appeared. Between April 2023 and March 2024, the nation’s employers created 818,000 fewer jobs than the U.S. Bureau of Labor Statistics (BLS) originally reported, according to the BLS’ annual data revision.

The BLS issued its largest downgrade since 2009 in its 2024 Preliminary Benchmark Revision, released Aug. 21, which found that job growth was nearly 30% less than the 2.9 million job gains it had originally reported. Instead of adding a robust 242,000 jobs a month on average, the country gained a solid 175,000 jobs a month during a time of historically high interest rates and inflation.

“This one is quite a biggie, but the monthly payroll gain remains pretty strong post-revision,” said Julia Pollak, chief economist at ZipRecruiter.

But she added that between April 2023 and March 2024, the unemployment rate rose from 3.5% to 3.8%. “So monthly payroll gains of 175,000 may have been strong historically—and above the 2019 average—but were below the breakeven rate for that period, given strong growth in the labor force,” she said.

The BLS bases its revisions on the Quarterly Census of Employment and Wages, which draws from state unemployment insurance records that reflect actual payrolls, while the prior estimates derive from monthly surveys and statistical analysis. The BLS revisions are preliminary and will not be finalized until February 2025.

While the revision looks at older data, it also serves as a critical gauge for the overall health of the U.S. labor market. There have been concerns in recent months that the labor market is starting to weaken, since the unemployment rate has increased to 4.3%. On the other hand, much of the gain in the unemployment rate has been attributed to an increase in people returning to the labor force and looking for work, rather than a surge in layoffs.

Industry Breakdown

At the sector level, the biggest downward revision came in professional and business services, where the number of jobs was reduced by 358,000. Other significantly downgraded industries include leisure and hospitality (-150,000), retail (-129,000), and manufacturing (-115,000).

A few sectors saw upward revisions, including private education and health services (+87,000), transportation and warehousing (+56,400), and government (+1,000).

Interest Rate Cuts Expected

The payroll revision adds to the belief that the Federal Reserve is late on cutting interest rates. Interest rates have remained at a 23-year high for more than a year as the central bank aims to bring inflation in line with its 2% target.

Inflation dipped below 3% in July for the first time since the pandemic, and Federal Reserve Chair Jerome Powell signaled Aug. 23 that it is time to start cutting interest rates, beginning in September.