Next US jobs report will define just how much labor market is slowing down

A denser-than-usual jobs report is expected to show just how much the U.S. labor market has slowed in recent years — or perhaps that it wasn’t growing at all.

In addition to the usual monthly payrolls and unemployment data, the January jobs report, due Wednesday, also includes highly anticipated revisions to payrolls. Those are expected to substantially mark down the pace of hiring, after a preliminary estimate suggested a record downward adjustment of 911,000 in the year through March 2025.

“The annual benchmark revisions are going to be more consequential than normal this year,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “Right now the labor market does appear to be on a knife’s edge between net job growth and maybe job loss.”

The report, which is produced by the Bureau of Labor Statistics, was originally scheduled for Feb. 6 but was delayed by the partial government shutdown.

With the release of each January employment report, BLS benchmarks payrolls to a more accurate but less timely series called the Quarterly Census of Employment and Wages. That data is based on state unemployment insurance tax records and covers most U.S. jobs.

In addition to the newly adjusted employment level for March 2025, BLS will release revised monthly payroll changes throughout last year. Those revisions also reflect the agency’s update to its model that accounts for business openings and closures as well as new seasonal adjustment factors.

The labor market was already understood to be gradually weakening last year, through what economists largely dubbed a “low-hire, low-fire” environment. But the revisions may indicate an even sharper slowdown in hiring than previously thought.

That could change how the Federal Reserve views the labor market, which Chair Jerome Powell recently described as one that is showing signs of stabilization. He’s said that job growth has probably been overstated, but that the economy is in a solid enough position for officials to hold interest rates steady for now.

His colleague, Fed Gov. Christopher Waller, disagrees. In explaining why he instead voted to lower interest rates again at the central bank’s January meeting, Waller said the revisions will likely show there was virtually no growth in employment last year.

“Zero. Zip. Nada,” Waller said in a statement. “This does not remotely look like a healthy labor market.”

Data out last week supported that view. U.S. companies announced the largest number of job cuts for any January since the depths of the Great Recession, while job openings fell in December to the lowest level since 2020.

January Data

For the more routine aspect of the report, January payrolls probably increased by 69,000, based on the median projection in a Bloomberg survey of economists. The jobless rate is seen holding at 4.4%, just below the four-year high of 4.5% reached in November.

“The January jobs report will likely leave the tepid picture of the labor market little changed,” Wells Fargo & Co. economists said in a note.

The revisions won’t affect the unemployment rate, which is derived from a survey of households. BLS separately surveys businesses to produce the payrolls figure.

Normally, BLS incorporates new population estimates to the household survey data in the January jobs report. But that was delayed a month because of last year’s record-long government shutdown.

Adjustments to the job numbers have been bigger than usual in recent years, which some economists attribute to unique post-pandemic dynamics. Revisions have also become highly politicized and were largely behind President Donald Trump’s firing of the previous BLS commissioner, when he claimed the data had been manipulated for political purposes.

In choosing a new commissioner recently, Trump again criticized the BLS for its history of releasing “VERY inaccurate numbers.”

Economists largely refute that characterization. Revisions happen as more source data becomes available, and the adjustments allow data providers to balance speed and accuracy as well as maintain the comparability of numbers over time, Jed Kolko, senior fellow at the Peterson Institute for International Economics, said on a Jan. 29 webinar.

“Revisions cause confusion, sometimes they fuel conspiracy theories, sometimes people even get fired,” said Kolko, who previously served as undersecretary for economic affairs at the Commerce Department. “But revisions should make you trust official statistics more — so long as revisions are transparent, anticipated and documented.”