“No Longer Negative”: BLS Annual Benchmark Revision Will Revise Payrolls Higher For First Time Since 2022

On Friday at 10am ET (at the same time as Chairman Warsh’s Jackson Hole remarks), the Bureau of Labor Statistics (BLS) will publish its preliminary estimate of the benchmark revision to the level of nonfarm payrolls for March 2026. The final benchmark revision will be issued and incorporated into nonfarm payrolls alongside the January 2027 employment report in February 2027.

The key source data for the benchmark revision comes from the Quarterly Census of Employment and Wages (QCEW), which is derived from state unemployment insurance records, and which is much more accurate than the BLS’s own internal surveys. The March 2026 QCEW data will be released at the same time as the preliminary benchmark estimate, introducing uncertainty around the ultimate size of the revision. However, as Goldman writes in its revision preview note (available to pro subs), based on the nine months of data released since the last benchmarked period, March 2025, a modest upward revision appears likely, the first one since 2022  and follows the massive negative revisions of 2023 and 2024.

Indeed, Goldman expects a preliminary upward revision on the order of 50-450k which would translate to a 5-40k upward revision to monthly payroll growth over April 2025-March 2026. A final revision of this magnitude would result in the average pace of payroll growth over April 2025-March 2026 being revised up from about 25k/month currently to 30-65k/month.

The preliminary estimate for the benchmark revision will likely understate the final revision: the chart above shows that the preliminary estimate has been below the final revision in each of the last six years, by roughly 100k on average. This reflects that the QCEW itself has been revised up in every quarter since 2019 with the exception of 2020H1 (chart below), potentially reflecting ongoing issues with initial submissions to the administrative records that inform the QCEW.

Revisions to the QCEW are one reason why the BLS only benchmarks payrolls to the QCEW annually and with a long lag.

An upward benchmark revision would mark the first since 2022. The last two benchmark revisions in particular have been quite negative, in our view likely reflecting difficulties accounting for unauthorized workers in the QCEW. (This potential undercounting is less of an issue for this year’s benchmark given the sharp slowdown in immigration, and should also be less of an issue going forward.) As we discussed first a few years ago when we correctly previewed the massive negative revisions to 2023 and 2024 data, since the QCEW is based on unemployment insurance records, it likely excludes most unauthorized workers, who contributed to employment growth in the periods covered by those benchmark revisions. In most cases unauthorized workers do not qualify for unemployment insurance, so employers might see little reason to pay unemployment insurance tax on their behalf and might even see it as a needless risk in the cases of any immigrants they are employing who do not yet have work permits.

The BLS provides a decomposition of the sources of benchmark revisions each year, split between revisions that arise from miscalibration of the birth-death model and revisions from other sources, such as sampling and reporting errors. Consistent with difficulties accounting for unauthorized workers, only a modest share of the last two benchmark revisions – and just 14% of last year’s very large revision – can be attributed to miscalibration of the birth-death model; the bulk instead falls into the residual category which would capture the reporting error arising from a systematic undercount of unauthorized workers.

More in the full Goldman note available to pro subs.