Will the million-strong employment army vanish into thin air? Tonight's US Non-Farm Payrolls "Annual Overhaul" is in the spotlight

A more highly anticipated U.S. non-farm payrolls report than usual is set to be released tonight at 9:30 PM Beijing time—this report will fully reveal the true picture of the U.S. labor market slowdown in recent years. Current signs suggest that U.S. job growth may have already stalled or even fallen into a “zero growth” trap.

Many industry insiders point out that the special aspect of tonight’s U.S. non-farm payrolls report is that, in addition to the usual monthly employment and unemployment rate data, this January report will also include annual revisions of employment data from the past nearly two years.

Sharp-eyed investors may recall that the preliminary adjusted data released by the U.S. Department of Labor last September showed that, over the 12 months ending March 2025, U.S. non-farm employment was revised downward by 911,000 jobs compared to the initially reported figures. It was also that summer when Trump dismissed then-Bureau of Labor Statistics Director Kathy Kraninger, accusing her of “politically manipulating employment data.”

Tonight, the Bureau of Labor Statistics will release the final revised version of this cycle’s data, as well as the revised monthly employment change figures for the entire last year. Scott Anderson, Chief U.S. Economist at BMO Capital Markets, said, “This year’s annual benchmark revision is likely to be more impactful than usual because the current U.S. labor market is indeed on the edge of net employment growth and potential job losses.”

In fact, last year, the U.S. labor market already showed signs of weakening, with economists generally describing it as a “freeze” environment characterized by low hiring and low firing. These revisions may indicate that the situation in the U.S. labor market is more severe than people have imagined…

Million Jobs “Disappearing”: Could U.S. Employment Growth in 2024 Be Completely Erased?

Currently, some industry forward-looking analyses, including well-known financial blog ZeroHedge, are beginning to worry that tonight’s non-farm report might show a “disappearance” of a million jobs—though this exaggerated notion of a million jobs “vanishing” doesn’t mean the actual data is worse than the preliminary adjustments from September last year, but rather that the scope of the revision will be broader.

First, a major focus tonight is the further revision of employment data for the 12 months ending March 2025. Each January, the Bureau of Labor Statistics calibrates employment data against more accurate but less timely quarterly employment and wage surveys (QCEW). This data is based on state unemployment insurance tax records and covers most U.S. jobs.

As previously mentioned, the preliminary estimate from September last year showed that U.S. employment growth during that period was revised downward by 911,000 jobs. A relatively good news is that industry estimates suggest the final downward revision might be slightly smaller—between 750,000 and 900,000 jobs.

In addition to the adjusted employment level through March 2025, the BLS will also release revised monthly employment change data for April to December last year. These revisions will also reflect updates to the agency’s business death model (NBD), which incorporates business openings and closures, using new seasonal adjustment factors.

Bank of America economists estimate that the employment increases from April to December last year could be revised downward by an average of 20,000 to 30,000 jobs per month.

Federal Reserve Chair Jerome Powell, citing Fed staff estimates in December, indicated that since April last year, the U.S. might have been losing an average of 20,000 jobs per month, rather than the previously forecasted 40,000 jobs gained per month. This suggests that federal data may have overestimated monthly job gains by as much as 60,000.

In any case, 2025 is likely to be the worst year for U.S. employment in nearly 16 years (excluding pandemic periods). Previously, the BLS reported that in 2025, the U.S. economy added only 584,000 jobs, well below the recent annual average of 2 million.

In the worst-case scenario, tonight’s data could even indicate that U.S. employment in 2025 might actually decline…

Fed “Dove” Waller had a premonition of this last month. Explaining why he supported another rate cut at the January FOMC meeting, Waller said that non-farm payroll revisions are likely to show that employment growth last year was almost zero.

“Zero, no growth, complete stagnation,” Waller emphasized in a statement. “This is not what a healthy labor market looks like.”

What will January’s employment data look like?

Of course, while focusing on the annual revision of non-farm payrolls, investors should not forget the original “main course”—the regular January non-farm employment report.

According to median forecasts from industry surveys of economists, January non-farm employment might increase by about 70,000 jobs, slightly higher than December’s 50,000; the unemployment rate is expected to remain at 4.4%. In November, the U.S. unemployment rate hit a four-year high of 4.5%.

Wells Fargo economists noted that January employment data might keep the weak labor market pattern largely intact.

It’s worth mentioning that the BLS usually incorporates new population estimates into the household survey data in January, but this process was delayed by a record-long government shutdown last year.

Generally, January non-farm employment estimates are difficult to forecast. Harsh winter weather often impacts employment in the first month of the year; additionally, all temporary hires during the holiday shopping season from Thanksgiving to Christmas tend to be cut back in January. Richard Moody, Chief Economist at Regions Financial, pointed out, “We believe there may be seasonal adjustment biases in January data.”

Some Wall Street economists currently predict that the actual January non-farm number will be below expectations. For example, Goldman Sachs expects only a 45,000 increase, while Citigroup forecasts 135,000 new jobs but considers this seasonally affected and, after adjustment, “actual employment growth is close to zero.”

CME Group’s latest report expects leading indicators to point to a non-farm number above expectations, with job gains between 90,000 and 130,000, but due to limited response rates, there is significant uncertainty.

Interestingly, even White House officials have been working to lower public expectations earlier this week. Kevin Hasset, director of the National Economic Council and a former Fed candidate, said Monday that multiple factors are at play, and at least for now, employment growth will remain subdued.

“I think, given the current high GDP growth, a slight decline in employment is normal… If we see a series of numbers below previous levels, there’s no need to panic. Population growth is slowing, but productivity is soaring. This is an unusual situation,” Hasset said.

Moody’s Analytics Chief Economist Mark Zandi said, “Market consensus expects around 50,000. Any number close to zero indicates how fragile and weak the situation is. All this is happening without a wave of layoffs, but layoffs will increase. I believe we will soon see a decline in employment numbers.”

One chart, quick overview—key points

(Source: Caixin Global)