NFP likely has been overstated since April 2024 by c.60k per month owing to birth-death adjustments. Actual job growth likely was much weaker in 2024 than the market had initially perceived. Labour demand started to soften months ahead of the immigration crackdown, Standard Chartered's economists Steve Englander and Dan Pan report.

2024 wasn’t as golden as it seemed

"Fed Chair Powell noted at the December FOMC meeting that the NFP data is likely being overstated by 60k per month given the upward bias from the BLS birth-death (B-D) adjustment. Our estimate of overstatement is 70k, but we will use Powell’s 60k in this report. Moreover, we agree with Powell that the overstatement has continued beyond the already announced March 2025 preliminary downward benchmark revision."

"Our puzzle is that after all the talk about immigration driving up employment growth, it turns out that 2024 was far from brilliant when revisions are accounted for and we assume the 60k overstatement. The conventional view is that immigration pumped up 2024 employment growth before dropping sharply in 2025. However, our calculation shows that labour demand had slipped way before the immigration crackdown started by the Trump administration."

"After correcting for bias, the ‘actual’ NFP likely averaged 70k between April and December 2024, whereas the initial data releases ran at an average 150k per month. If we use QCEW data and other regression methods to back out nonfarm payroll growth between March and December 2024, we find even bigger downward adjustments."