The Bureau of Labor Statistics (BLS) is set to release its preliminary benchmark revision to US labour market data, covering the 12-month period up to March 2025. Expectations are for a downward revision, indicating potential overestimation of hiring figures, with estimates suggesting 700,000 to 800,000 fewer jobs than initially reported.
If correct, it would mean average monthly job growth in the US last year was around 100,000, not 165,000 as earlier reported. This contrasts sharply with the recent average of 29,000 jobs per month during June to August. The revision draws from new data from the Quarterly Census of Employment and Wages, aiming to improve labour market data accuracy.
Job Revision Impact
Last year, a similar revision revealed 818,000 fewer jobs from March 2024, signalling labour market weaknesses. The current scenario might influence attitudes towards rate cuts, as nearly three have been accounted for, and raises questions about potential responses before new inflation data emerges this week.
Today’s jobs revision is expected to show the US labor market is much weaker than we thought. The preliminary numbers could erase up to 800,000 jobs from the count through March 2025, which would change the narrative significantly. This suggests the average monthly job growth last year was closer to 100,000, not the 165,000 previously reported.
This potential slowdown is not happening in a vacuum; it adds to a growing pile of evidence. We have already seen the unemployment rate tick up to 4.1% in August 2025, and job openings from the JOLTS survey have fallen below 8 million. A significant downward revision today would confirm that the labor market’s resilience was overestimated.
We saw this play out before when we look back at last year’s revision. For the period through March 2024, the data was revised down by 818,000 jobs, which was an early warning sign that cracks were forming. This year’s revision, if confirmed, points to that weakness becoming a clear trend rather than a one-off event.
Implications for Traders and the Fed
For derivative traders, this strengthens the case for a more dovish Federal Reserve. With the market already pricing in nearly three rate cuts, positioning for lower interest rates through options on SOFR futures seems like a direct way to act on this view. This would allow traders to benefit if the Fed is forced to cut rates more aggressively than anticipated.
The immediate focus will be on the possibility of a larger rate cut sooner rather than later. This revision, even before we get Thursday’s crucial CPI inflation data, could push the market to increase bets on a 50 basis point cut at the next meeting. Therefore, watching for shifts in fed funds futures pricing will be key throughout the day.
Given the potential for a large market reaction, volatility could increase. Buying call options on the VIX index could serve as a cheap hedge against any sharp moves following today’s number or Thursday’s inflation report. This protects a portfolio from the uncertainty surrounding the Fed’s next steps.
