29 Sept 2025
The QCEW report reveals a substantial downward revision of 911,000 jobs, indicating that actual employment growth was considerably weaker than initial estimates. This revised data intensifies market expectations for the Federal Reserve to implement interest rate cuts.
The QCEW report reviews employment across all counties, measuring growth from March 2024 to March 2025.
National employment reached 154.5 million people by March 2025, reflecting a 0.4% increase over the previous year, with the highest annual employment growth recorded at 3.4%.
The report identified a reduction of 911,000 jobs in its revision, signifying that actual employment growth was considerably weaker than initially reported, representing the largest downward correction since 2000.
The weaker employment growth findings are increasing pressure for the Federal Reserve to cut interest rates.
Employers initially appeared to create approximately 1.8 million jobs in the year ending March (averaging 149,000 per month), but the revised data indicated that the monthly average was nearly halved.
The revision suggests a recent softening of the labor market following a prolonged period of moderate growth, potentially paving the way for interest rate reductions.
Given the increased labor market risks, traders anticipate the Federal Reserve will begin interest rate cuts this month, expecting successive reductions.
Following the report's release, bond yields increased, and the S&P experienced some fluctuations.
This annual employment revision received particular market attention this year due to the intense focus on the labor market, with participants seeking signs of a slowdown.
Job reductions occurred across nearly all sectors, with particularly sharp declines in personal jobs (approximately 880,000), manufacturing (-95,000), wholesale and retail trade, transportation, utilities, professional business services (-158,000), and hospitality (-176,000).
Service PMIs revealed that employers were uninterested in new hiring, preferring stable employment over creating additional jobs, contributing to severe reductions in the services sector.
Discrepancies between preliminary and final data are attributed to potential errors in the BLS's estimation model post-COVID, and the exclusion of undocumented immigrant jobs from QCEW data, which relies on unemployment insurance records.
The revisions are technically based on payroll and wage statistics, not unemployment rates, and comprehensively cover most jobs through unemployment insurance tax records.
The market anticipates a 92% probability of a Federal Reserve rate cut in September, with increased expectations for further cuts in October and by the year's end.
Initial market reactions to the report were somewhat contradictory due to current geopolitical conditions, such as news of an Israeli attack on Doha, leading to illogical responses that are expected to normalize in the coming days.
The significant downward revision of 911,000 jobs, the largest since 2000, indicates that actual employment growth was substantially weaker than initially reported, thereby increasing pressure for interest rate reductions.
| Insight Category | Key Detail | Consequence/Implication |
|---|---|---|
| Employment Data Revision | 911,000 jobs reduced in revised QCEW report | Employment growth significantly weaker than previously reported; largest downward revision since 2000 |
| Monetary Policy Impact | Weaker labor market conditions | Increased pressure on Federal Reserve to initiate interest rate cuts |
| Employer Hiring Trends | Monthly job creation halved from initial estimates | Employers show reduced interest in new hiring, leading to stagnant or declining employment |
| Sectoral Job Losses | Significant reductions in Manufacturing, Wholesale/Retail Trade, Professional Services, and Hospitality | Broad-based job declines across major economic sectors |
| Causes of Data Discrepancies | BLS estimation model errors and exclusion of undocumented immigrant jobs | Challenges in accurately capturing full labor market dynamics through official records |
| Market Expectations for Fed | 92% probability of a Fed rate cut in September | Strong market anticipation for immediate and successive interest rate reductions |
