Instant Reaction: US Payrolls Marked Down a Record 911,000 in Preliminary Estimate

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1:50Explore more at 4imprint.com. 4imprint. 4certain. Bloomberg Audio Studios. Podcasts. Radio. News. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3 ,000 journalists and analysts around the world. Good morning, everyone. Scarlet Fu and Tom Keen. And as Scarlet Fu predicted, it didn't come in. But there is the first print of this preliminary number, and it is toward what we heard from Dr. Englund or Scarlett. I'm going to suggest negative 9-1-1 is a wow statistic. We begin strong in this special edition of Bloomberg Surveillance with Ira Jersey of Bloomberg Intelligence.

2:39Ira, I guess we see an economic statistic 300 ,000 or so off the mark. What does it mean for a bond market to see our labor so beleaguered? Well, I think these revisions are very hard to forecast, I mean, by definition, because they cover such a long period of time. But the fact that we had even slower employment growth than we thought and had forecasted, clearly the market took that as bad for the economy. And that's the reason why you saw bond yields go from up a little bit in the front end to flat to maybe a little bit lower in the front end. Importantly, I think here it just shows that, you know, the Federal Reserve has to take this into consideration when they deliberate next week what to do with interest rates.

3:29And it just solidifies even more that they're going to cut next week. And I suspect that it might actually give some of the people who are on the fence about the timing of cuts to not only cut in September, but also do a string of cuts and cut again in October, December and January as well. To your point about how it's very difficult to forecast this, in a survey of economists that Bloomberg has compiled, the lowest estimate for this revision was 900 ,000. And the actual number reported was 911 ,000 reduction in the number of jobs over the 12 months to March 2025. So we had expected a negative revision, perhaps not this sizable.

4:07How much of this was totally baked in to the point where a 50 basis point rate cut is something that is now becoming more of the default scenario? Yeah, well, you know, I don't think that the Fed's going to go 50 and the market's not fully priced for that, not even 50 percent priced for a 50 basis point rate cut. At least it wasn't when I walked in here. I haven't checked in the last two minutes. But I doubt that it's really changed. And one of the big reasons for that is there still is this inflation overhang, right? The fear about tariffs may be still adding to some inflation. We haven't seen all of it.

4:41You've heard a lot of Fed speakers talk about the net effect of tariffs hasn't yet been seen. So I think the Federal Reserve wants to be cautious, right? And the idea that they don't have to go at every meeting, I think that's what this takes off the table, that unless you see an insanely low CPI print and tomorrow's PPI winds up being very low as well, at least below consensus, then the Federal Reserve probably just does their 25. Then they guide, right? And it's that guidance, I think, that will ultimately move the bond market. And does that guidance say, hey, we're going to cut 150, 150 basis points maybe.

5:22that's where the updated dot plot is going to matter as well as their general summary of economic projections. In terms of the reaction in markets, I mentioned how the two-year yield, the 10-year yield went negative briefly, but they're back up again, and we're now seeing the two-year yield higher by 1.8 basis points, 10-year yield 4.06 percent up higher by 2.2 basis points. What do you see in terms of the direction of yields? because a lot of people were saying that this revision would unlock the trajectory for yields for the rest of the year. Was that placing too much importance on it? Yeah, I think so.

5:57I don't see that. Ultimately, the market's trying to be forward-looking, right? And these are revisions to past data, and don't necessarily reflect how the economy's going to do over the next 3 to 12 months, right? But it does show the trend, and I think that that's important. And that trend maybe is a little bit more severe than we thought. So that's where I think a 25 basis point move is kind of your base case. And then what's the follow on from that base case? For the long end of the curve, I think that we are a little bit overbought. We have rallied very far, very quickly. So it wouldn't surprise me if we consolidated a little bit here.

6:40I think, Tom, you asked if we were going to see sub 4%. Yeah. You know, we've had since February, we've had our forecast for year-end has been 3.95 % or thereabouts on the 10-year yield. So we're effectively there. Special edition, extended edition, I should say, of Bloomberg Surveillance. Scarlett Fu and Paul Sweeney with Bloomberg Intelligence. We'll pick that up at near a quarter after the hour. Right now, Scarlett Fu and Tom Keen for you. Without commercial interruption across the nation. Efforting a number of voices here, we'll stay with Ira Jersey and move on to other conversations in a moment.

7:14Ira, I'm going to ask you and all our guests this question. Is a simplistic way to look at this is to take 9-11 and divide it by 12, and we take 76 ,000 jobs off nonfarm payrolls looking back 12 months? Yeah, that's basically what you do. I mean, obviously, it's not going to be as linear as that, but effectively what you're saying is$75 ,000 less jobs per month were created. And that doesn't paint a rosy picture for the economy at the moment. So, you know, now some people are suggesting that perhaps this is the low and that we'll wind up seeing some hiring. I'm not as convinced of that. When you look at the NFIB survey and a lot of the other sentiment surveys around the corporate world, it does seem that people are kind of pausing their hiring plans.

8:05So if no one's being hired and you still have layoffs, then the hurdle to get positive payroll growth is even that much higher. Ira, thank you so much. Ira Jersey with Bloomberg Intelligence. I stopped by Michael McKee's desk this morning. I had to fight through his people. Got through, and I said to him, is there a whisper number on preliminary benchmark payroll revision? Joining us now, Michael McKee, you said there was no whisper number. There's no whisper number. Are you surprised by negative 9-11? That's a lot of jobs. I think we're surprised by the amount, but the fact that it was going to be a big number wasn't a surprise to most people.

8:44the range in the Bloomberg survey was from 200 ,000 to 900 ,000. And there were people who were even suggesting a million. And so that's not a surprise. Remember, what you have to do is take this, go back to March, 159 ,250 ,000 jobs were what the BLS had counted on payrolls as of March of this year. Now you subtract 911 ,000 from that in March, and that's where you are. So this is really backward looking data. It's a way to update the data with actual data rather than a survey. Yeah. And it does show that the economy was weaker than we thought, but it doesn't have a lot of implications going forward.

9:26Okay. I'm going to ask a really obvious question for people who don't watch or listen. That's what I do. I'm competing with you on that. But for folks who don't monitor every single jobs report or every weekly jobless claims number. There are no people like that. Well, maybe those who don't listen to Bloomberg Radio, but for my mother who might tune in, how come the government can't get it right the first time around? Why would there be such a large revision, negative 911 ,000 jobs over a 12-month period? Well, the size of the revision is maybe a bit of a surprise, but the fact that they are revised, that happens every year and it's hundreds of thousands in either direction because what the BLS does is take a survey every year or every month.

10:09They survey 161 ,000 establishments around the country, which is about, they say they account for about 33 % of all payrolls. A sample. And this is the once a year data that they use when they get it of in unemployment insurance taxes paid by companies. So they can see how many people actually were on payrolls. And that is about 98 % of all jobs. So this is a much more accurate thing. But the numbers don't come out at the same time. The survey is the best they can do in the meantime. Nerdfest, an extended edition of Bloomberg Surveillance. Scarlett Fu and Tom King with you. Bloomberg Intelligence coming up here in eight or nine minutes.

10:52Stephanie Roth on deck. We'll get to her in a moment. I'm not going to ask Stephanie this question because that would be rude. So I'll ask you the rude question. The president is going to respond to this. Does he say these were Biden jobs that were lost? Well, one would assume that politically that would be the move for him. But there has been some sort of feeling out there that what he's going to do is use this to attack PLS because he's already started that. And say, how could you be that wrong? And we need to basically fire y 'all and start over again or something like that. So we're waiting to see how he responds.

11:28But don't know yet. Michael McKee, thank you so much for having all of our economic coverage. truly knowledgeable on these arcane economic moments. Joining us now, Stephanie Roth, kind enough to be with us in the last 48 hours, chief economist at Wolf Research. Stephanie, I guess it's a surprise to a worser number from this preliminary statistic to the actual statistic. Can there be more mystery? Yeah, I mean, the thing is, last year, there was a bigger initial preliminary than the actual, so 18 versus the actual of 589. So I think markets are just recognizing that we knew that there was going to be a large revision, and it might not be ultimately as large when we get the actual in early 2026.

12:13Stephanie, what would you be listening for, watching for when the president does eventually respond? As we've been noting, the period covers the end of the Biden administration and the very beginning of the Trump administration and the president will be quick to say that it is all Joe Biden's fault. I think that's probably right. And perhaps as Mike McKee was saying earlier, it's perhaps more of just an attack on BLS and not getting the numbers right. Granted, this is a really difficult thing to estimate in real time. And BLS does their best by having a survey that doesn't represent the full sample.

12:44So once they incorporate all of the data from the unemployment insurance records, then they can get the full picture and it's not always exactly right. But what we have seen is the preliminary is larger, shows a larger revision in recent years than the actual. Stephanie Roth with us, and we will continue with Ms. Roth of Wolf Research. News intrudes. Oil has surged up$1, up 1.5 % on Brent crude, 66.58 on Brent crude. Gold elevated$15. Our top live team. Thank you, Paul Wallace, for your leadership in the Middle East. Israel strike in Qatar. This attack in Qatar is unprecedented. It's difficult to overstate how angry it could make the leadership in Doha, as well as other Gulf states, such as Saudi Arabia and the UAE.

13:33And to go over to the headlines, this is just breaking now in terms of actual headlines and not speculation. And the headline is simply, Israel targets Amas leadership in strikes on Qatari capital. That from our Paul Wallace and Alisa Odenheimer as well. Scarlett Fu with Stephanie Roth. So let's follow up on that headline with oil prices now rising and you see WTI, for instance, up one and a half percent. Brent crude up one and a half percent as well. We're talking about approaching a high$60 range at some point. What does that mean for the inflation picture, Stephanie? We get CPI and PPI this week and all focus will be on that.

14:14But But down the road, if this war is revived and this becomes a constant pressure point, how are you folding that into your analysis of inflation? Yeah, I mean, there does continue to be more inflation pressures than generally expected. So oil prices tend to look at a little bit differently. And that's why the Fed looks at core, which excludes food and energy. But when we're thinking about the broad-based inflation picture, we are worried that inflation pressures are going to pick up in the next couple of months. because by our estimates, we only we see about 35 to 40 percent of the tariff pass there has already happened, in which case a lot of it is ahead of us.

14:48And it might just look like a number of prints where core inflation is running in the 0.3 to 0.35 percent range, which just poses a challenge. So the energy prices in and of itself may be a little bit less important, but the broad inflation picture is a bit challenging the next couple of months. Stephanie, thank you so much.

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