Big surprises could spell trouble for the economy.
Employers are increasingly putting their “help wanted” signs back into storage. Last week, the nonfarm payrolls data (a key measure of economic health that counts the number of new non-farm-based workers) was revised sharply lower for May and June:
- The Bureau of Labor Statistics lowered the May figure from 144,000 new jobs to 19,000.
- June fell from 147,000 new jobs to 14,000.
- Taken together, it represents a downward revision of 258,000 new jobs, making it the largest two-month revision since the start of the pandemic in May 2020 (see the chart).
- Along with those large downward revisions, an initial estimate showed 73,000 new jobs were created in July.
Nonfarm Payrolls
(two-month average since December 2019)
After these sizable revisions, President Trump fired the commissioner of the Bureau of Labor Statistics, the agency responsible for gathering labor market data. While the latest revisions were substantial, it’s important to remember that payroll data is typically adjusted over time, as it’s based on surveys businesses return after the initial release. All initial payroll reports will be revised twice over the next two months as more survey data becomes available.
That said, revisions of this magnitude significantly alter the broader picture, especially in the wake of monthly average job growth that has been below 150,000 jobs. Example: The three-month moving average of new jobs now sits at 35,000 per month, and that doesn’t include likely revisions to the weak July data.
These surprising developments caused short-term Treasury yields to plummet late last week, reflecting investors’ growing expectations of a Fed rate cut to shore up the softening labor market. While a September cut is now seen as highly likely, the market is still calling for two total rate cuts this year, suggesting that investors aren’t currently panicking over the state of employment. We’ll monitor that sentiment closely, but would not be surprised to see an additional rate cut work its way into 2025, given the recent developments.
By Mike Dickson, Ph.D.
Originally published August 6, 2025
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