Nine hundred eleven thousand jobs vanished in the BLS payrolls revision, a record downgrade that is reshaping rate‑cut bets.
The Bureau of Labor Statistics’ preliminary benchmark update for the year ending March 2025 subtracted 911,000 positions from previously reported nonfarm payrolls. That change pulls the average monthly job gain to roughly 71,000 from 147,000. The benchmark process leans on state unemployment insurance tax records and is finalized in February, but markets rarely wait for the last word.
Pricing for the September meeting shows traders leaning toward a cut. One widely watched dashboard has implied probabilities around 88.4% for a 25 bp move and 11.6% for 50 bp, while prediction markets show higher odds for a half‑point. The revision also lands days before August CPI, with several banks warning that a hotter core print could sway timing even if the direction is set.
What the BLS payrolls revision changes
Benchmark revisions do not change the direction of the economy by themselves, but they recalibrate the starting point for analysis. With fewer accumulated job gains, output estimates and productivity math shift, and policy makers face a harder trade‑off if inflation proves sticky. It also reframes recent soft patches in hiring as part of a longer slowdown rather than a brief wobble.
- The preliminary cut lowers average monthly job creation to about 71,000 from 147,000.
- JPMorgan projects August CPI at 2.9% year over year and core at 3.1%.
- Its playbook: core CPI above 0.40% m/m could knock the S&P 500 by 1.5%–2%; 0.35%–0.40% implies 0.5%–1% losses; below 0.25% could lift gains by 1.25%–1.75%.
- Bitcoin (BTC) spot ETFs saw $364 million in net inflows on Monday, while Ethereum (ETH) spot ETFs extended outflows, per fund flow trackers.
- Spot gold touched $3,673.95/oz, adding a safe‑haven lens to the labor data.
How the BLS payrolls revision resets market pricing
Banks are now split on the size of the first cut. JPMorgan expects 25 bp in September, with risks skewed to October or December if CPI surprises hot. Standard Chartered publicly floated 50 bp. JPMorgan CEO Jamie Dimon said the Fed will probably reduce rates, while warning that the economy looks to be weakening. Those statements align with the repricing visible across rates, equities, and dollar crosses.
For crypto, the transmission channel runs through liquidity and risk appetite. Lower policy rates reduce cash yields and can redirect some of the $7.4 trillion in money market funds into higher‑beta assets. BTC ETF inflows and ETH ETF outflows suggest investors are differentiating within digital assets rather than buying indiscriminately. If CPI lands near or below 0.25% month over month on core, the near‑term read‑through is friendlier for duration and for growth proxies, including large‑cap tokens.
The revision also intersects a separate trend: a surge in gold to record highs. Rising bullion alongside rising odds of easing can reflect hedging demand if investors see cuts as reactive to weakness instead of proactive. As one strategist cautioned, not all rate cuts are equal; an “insurance” cut amid steady growth carries different implications than an emergency move.
Beyond the CPI print, watch continuing claims and hours worked for validation that hiring is cooling and labor hoarding is fading. Wage growth is the sticky variable for core services inflation; a softer labor market would help, but a second‑round inflation bump would complicate the path. If the inflation side cooperates, 25 bp in September with a follow‑up in December would be consistent with current pricing. A 50 bp shock would likely require a downside growth surprise.
What to watch next
The calendar is compressed: CPI this week, the FOMC decision in eight days, and final benchmark confirmation next February. For digital assets, liquidity is the hinge. BTC and ETH tend to respond most to real‑rate moves and dollar direction. If the BLS payrolls revision is validated in February, the growth narrative resets lower and the easing cycle could stretch, a setup that historically favors duration and growth proxies.
Investors do not have to front‑run the Fed. A disciplined approach is to map outcomes around CPI thresholds and reassess after the dot plot. The risk is binary: a warm CPI delays cuts and props up real yields; a cool CPI clears the way for September and keeps the soft‑landing story alive. Either way, the BLS payrolls revision will frame that debate for months.
