Payroll employment growth was slower last year than expected, revealing greater weakness in sectors that formerly thrived during the pandemic. This suggests the US economy might have grown at a slower pace than current data indicate. Revisions ahead could further alter the narrative, but the employment downgrades are more consistent with our projections of moderation in the labor market so far.

The Bureau of Labor Statistics (BLS) published the annual preliminary revision to its Establishment Survey employment series this week. The revision states that there were 306,000 fewer jobs added between March 2022 and March 2023 than initially reported, bringing the total number of jobs gains during this period from 4.05 million to 3.74 million – a 7.5 percent downward adjustment. While the final revision is not until February and numbers are still subject to further changes, these counts better reflect reality as they are based on state unemployment insurance (UI) tax records that almost every employer is required to file as opposed to a sample. 

Although  labor markets were still very strong last year, industries we found to be under the greatest risk of layoffs in The Conference Board Job Loss Risk Index including transportation and warehousing, and information services had the largest downward revisions percentagewise.

The revision to transportation and warehousing wiped out all the job gains previously reported (see Table below) suggesting job growth in the industry was slow for longer than previously stated. The industry lost more than 13 thousand jobs since March 2023 as well, and we expect further job losses in the event of a recession as consumer spending on goods dwindles further.

Revisions to employment in information services, where most tech companies are listed, erased more than half of the gains initially reported during the period. The industry recorded job losses since March 2023 and suggested a decline in labor demand in the industry. Other notable downward revisions were for personal care, repair and other services, manufacturing, and professional and business services.

Meanwhile, the revision in retail trade employment turned the small job loss from original jobs reports into a gain. Government, construction, wholesale trade, financial activities, and utilities also had more jobs added than previously reported. Nonetheless, these upward revisions were more than offset but fewer jobs elsewhere.

Employment change between March 2022 and March 2023 before and after preliminary revision, in thousands