In 2025, the U.S. non-farm employment will undergo the largest adjustment in history, with a major revision of immigration data, and household employment is expected to be significantly revised upward by 2.3 million.
On February 7 of this year, the U.S. Bureau of Labor Statistics released the January non-farm report, which included an annual benchmark revision of the household survey. This benchmark revision will re-anchor the non-institutional resident population of the survey to the newly released census forecasts, leading to adjustments in labor force, household employment, and other indicator levels.
It is worth mentioning that the non-farm report data comes from two sources—business surveys and household surveys. The business survey is conducted by asking about the number of positions on payrolls, while household employment surveys inquire about the actual employment situation of households, covering a broader range of employment situations than business surveys. For a long time, the number of new jobs reported by business surveys has been higher than that of household survey data.
Regarding this adjustment, Goldman Sachs noted in a report on Tuesday that the census has severely underestimated population growth in recent years, and its estimates of immigration for 2023-2024 are based on lagging migration information from the 2022 American Community Survey (ACS), thus failing to capture the recent wave of immigration. This means that household surveys have also severely underestimated employment growth; last December, the census adjusted its estimation methods and raised its net immigration estimates for 2021-2024 by 3.5 million.
This estimate is close to Goldman Sachs' prediction, which further stated:
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When the new data is incorporated into the January employment report, the non-institutional resident population will increase by 3.5 million (on top of trend population growth), and household employment will increase by 2.3 million, marking the largest revision in history. Data prior to 2025 will not be revised.
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Overall, after the revisions, total labor force is expected to increase by 2.5 million, household employment by 2.3 million, labor force participation rate to rise by 11 basis points, and the unemployment rate to rise by 4 basis points. Looking ahead, the U.S. Census Bureau expects that population growth in 2025 will return to normal, at about 1.9 million.
<h2>Non-farm Employment to Face Largest Adjustment in History, Unemployment Rate May Rise by 4 Basis Points</h2>
Goldman Sachs stated that this revision will be reflected in the January 2025 employment report:
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It is expected to increase the non-institutional civilian population by 3.5 million (beyond trend growth) and bring household employment up by 2.3 million. This will be the largest upward revision in history.
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This revision is expected to bridge the cumulative gap of about three-quarters between non-farm employment data and household employment data since the surge in immigration in early 2022. However, data prior to 2025 will not be retrospectively revised.
Furthermore, the revision will disproportionately affect the size of certain demographic groups, Goldman Sachs pointed out:
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These changes in the labor market are due to the Census Bureau reallocating an additional 3.5 million people across states, age, gender, and racial groups. This allocation is based on sample data from immigrants from 2019 to 2023.
According to the 2023 American Community Survey report, these immigrants are more likely to be young Hispanic or young Asian individuals than the average population. Therefore, the revision should disproportionately increase the size of these specific demographic groups in the household survey.
At the same time, Goldman Sachs expects the revisions to have a series of impacts on labor indicators:
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For example, the labor force participation rate and unemployment rate among young Hispanics and young Asians are higher than the average population. Therefore, the disproportionate increase in the population size of these groups will raise the overall labor force participation rate and unemployment rate.
After the revisions, the total labor force is expected to increase by 2.5 million, household employment by 2.3 million, the labor participation rate by 11 basis points, and the unemployment rate by 4 basis points. The Census Bureau expects employment growth to return to normal in 2025, at about 1.9 million. Goldman Sachs anticipates that the population growth assumptions used in the household survey will align with this more realistic growth rate in 2025.
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However, Goldman Sachs warns that the Census Bureau's allocation of revised population figures did not take into account immigration status or place of birth, which may lead to less accurate estimates of certain ratio variables (such as labor participation rate and unemployment rate). In particular, newly arrived immigrants typically have lower labor participation rates in the first few years after entering the country compared to other non-immigrants with similar demographic characteristics, so the 11 basis point increase in the labor participation rate may be overestimated

Goldman Sachs stated that the January non-farm payrolls in the United States will undergo the largest adjustment in history. After the annual benchmark revision of the household survey, it is expected that the total labor force will increase by 2.5 million, household employment will increase by 2.3 million, the labor participation rate will rise by 11 basis points, and the unemployment rate will rise by 4 basis points

- In 2025, the U.S. non-farm employment report will undergo its largest adjustment, with household employment expected to be revised up by 2.3 million due to a significant overhaul of immigration data.  
- The Bureau of Labor Statistics will implement an annual benchmark revision on February 7, 2025, aligning non-institutional resident population estimates with new census projections, which will increase total labor force by 2.5 million and raise the unemployment rate by 4 basis points.  
- Goldman Sachs notes that this adjustment will disproportionately affect certain demographic groups, particularly young Hispanic and Asian populations, potentially leading to an overestimation of labor participation rates.

Goldman Sachs predicts: There will be "big changes" in the U.S. non-farm payrolls on February 7