How much has the U.S. labor market slowed down? Closely watch Wednesday's nonfarm payroll report—it's highly significant and packed with information.

The upcoming US employment report is highly significant and unusually dense with information. The report is expected to reveal just how much the US labor market has slowed in recent years, or possibly, whether there has been no growth at all.

This report, compiled by the US Bureau of Labor Statistics (BLS), was originally scheduled for release on February 6, but was delayed due to a partial government shutdown.

In the more routine part of the report, according to the median forecast in a Bloomberg survey of economists, nonfarm payrolls are expected to rise by 69,000 in January; the unemployment rate is expected to stay at 4.4%, slightly below the four-year high of 4.5% reached in November last year. Analysts expect the January nonfarm payroll report will not change the overall picture of labor market weakness.

Beyond the regular monthly nonfarm payroll and unemployment rate figures, this Wednesday's January employment report will also include much-anticipated employment data revisions. Earlier preliminary estimates indicated that employment could be revised down by 911,000 for the year ending in March 2025, a record, meaning hiring will be substantially revised downward.

Industry insiders believe this year's annual benchmark revisions will be more important than usual. At present, the labor market appears to be at a critical point between net job gains and the potential for job losses.

When releasing the employment report every January, the BLS aligns nonfarm payroll data with a set of more accurate but less timely statistics—the Quarterly Census of Employment and Wages. This data is based on unemployment insurance tax records from each state and covers most jobs in the US.

In addition to publishing the adjusted employment level for March 2025, the BLS will also revise nonfarm payroll changes for each month of last year. These revisions reflect updates to the agency’s modeling, which incorporates business openings and closings, as well as new seasonal adjustment factors.

Last year, the US labor market was widely viewed as gradually weakening, with economists describing it as an environment of “low hiring, low layoffs.” But this revision may reveal that the slowdown in hiring was even more severe than previously assumed.

This could change the Federal Reserve’s view of the labor market. Fed chair Powell recently stated that the labor market is showing signs of stabilizing. He believes employment growth may have been overestimated, but the overall economy is still sufficiently robust, so officials can currently keep interest rates unchanged.

His colleague, Fed governor Waller, has a different perspective. Explaining his vote to support another rate cut at the January monetary policy meeting, Waller said these revisions are likely to show that job growth last year was almost nonexistent. “Zero. None. Absolutely none. This is not at all a healthy labor market.”

Data released last week supports this view. The number of layoffs announced by US companies hit its highest level for any January since the most severe period of the Great Recession, while JOLTS job openings in December fell to their lowest since 2020.

Data Revisions

It should be noted that the above revisions do not affect the unemployment rate, because the unemployment rate is based on household surveys; nonfarm payroll data comes from business surveys.

Typically, the BLS incorporates new population estimates into its household survey in the January employment report. But due to last year’s record-long government shutdown, this adjustment was delayed by a month.

In recent years, revisions to employment data have generally been larger than in the past, and some economists attribute this to unique post-pandemic economic dynamics. The revisions have also become highly politicized, largely contributing to former President Trump’s decision to fire the previous BLS director—claiming the employment data was manipulated for political purposes. When recently appointing a new director, Trump again criticized the BLS for long publishing “extremely inaccurate data.”

Most economists refute this claim. They argue that as more original data becomes available, revisions are inevitable, and these adjustments help data publishers balance timeliness and accuracy while ensuring comparability over time. “Revisions spark confusion, sometimes fuel conspiracy theories, and occasionally even lead to people being fired. But as long as the revisions are transparent, predictable, and well documented, they should actually enhance your trust in official statistics.”

Risk Warning and DisclaimerThe market involves risks, and investment should be done cautiously. This article does not constitute personal investment advice and does not take into account the special investment goals, financial situation or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their specific situation. Investing based on this is at your own risk.