“Million-Level” Downward Revision May Shockingly Hit—Is It a Counterattack Signal for Gold Bulls?
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“Million-Level” Downward Revision May Shockingly Hit—Is It a Counterattack Signal for Gold Bulls?
NFP Surprise Warning!
Navigating Web3 tides with focused insightsAuthor: JINSHI Data
The U.S. Bureau of Labor Statistics (BLS) will release the delayed January nonfarm payrolls report—originally postponed due to a brief government shutdown—at 21:30 Beijing time on Wednesday. This report will also include annual benchmark revisions and methodological updates.
The market’s median expectation is for January nonfarm payrolls to rise by 70,000 jobs, following a gain of 50,000 in December; the unemployment rate is expected to hold steady at the low level of 4.4%; average hourly earnings are projected to rise 0.3% month-on-month—unchanged from the prior month—and 3.6% year-on-year, down from 3.8% in the previous month.
However, several Wall Street economists expect the data to fall short of consensus. For example, TD Securities forecasts subdued job growth in January, projecting only 45,000 new jobs—matching Goldman Sachs’ estimate. Meanwhile, Citigroup forecasts 135,000 new jobs but notes this figure reflects seasonal distortion, adding that “after reasonable adjustment, employment growth is close to zero.”
“I think the expectation should be zero,” said Mark Zandi, Chief Economist at Moody’s Analytics. “Market consensus may hover around 50,000. Any figure near zero would underscore how fragile and extremely weak the labor market has become. We haven’t yet seen a wave of layoffs—but layoff numbers are set to rise soon, and I believe we could see negative payroll growth before long.”
Economists’ low expectations align with a series of recent unofficial, private-sector indicators. Last week’s data showed sluggish hiring, rising layoffs, and virtually no change in newly posted job openings.
Annual Nonfarm Payrolls Benchmark Revisions: Past Gains Likely to Be Erased
Even more challenging is the issue of nonfarm payrolls revisions—a persistent difficulty for the BLS, which consistently struggles to obtain timely and relevant data.
In September last year, the BLS preliminarily estimated that, over the 12 months through March 2025, employment would be 911,000 lower than previously reported—nearly halved. The agency will release its final revision figure on Wednesday. While the market expects the final number to be somewhat lower than the preliminary estimate, it will still be highly significant: Goldman Sachs projects a range of 750,000–900,000, while Federal Reserve Chair Jerome Powell indicated several weeks ago that the revision could approach 600,000.
Every monthly employment figure released so far in 2025 has been revised downward, cumulatively reducing the tally by 624,000 jobs and bringing the average monthly gain to under 40,000. Wednesday’s report will also include the first revision to December’s employment data.
Additionally, the BLS will apply updated business births-and-deaths modeling and re-estimated seasonal factors for the period from April to December 2025. These adjustments will incorporate the latest information from the Quarterly Census of Employment and Wages (QCEW) and the monthly establishment survey, and are expected to result in a further downward revision of 500,000–700,000 jobs.
In other words, more than one million nonfarm jobs reported through December 2025 never actually existed.
Overall, the revisions included in the January report will point to a stumbling labor market, prompting Powell and his colleagues to weigh this factor more heavily when setting their next policy course.
White House Preemptively “Cools Expectations”: Low Growth Is Not Weakness—It’s the New Normal
This week, White House officials have been actively managing market expectations downward. For President Donald Trump, a disappointing jobs report could carry adverse political implications, further complicating his effort to convince skeptical voters that his agenda has delivered tangible economic improvements.
Peter Navarro, White House Assistant for Trade and Manufacturing Policy, told Fox Business on Tuesday: “We must significantly lower our expectations for monthly jobs data.” He noted that Trump’s policies have reduced the number of jobs the labor market needs to create and sustain to reach a “steady state.”
Kevin Hassett, Director of the White House National Economic Council, stated on Monday that multiple factors are jointly contributing to subdued job growth—at least in the near term.
The most important factor cited is the administration’s crackdown on illegal immigration. Hassett also pointed to AI-driven productivity gains, which are dampening firms’ hiring demand.
“I think people should expect slightly softer jobs data—and that’s consistent with strong GDP growth… If you see a string of figures below what we’ve grown accustomed to, there’s no need to panic,” he said Monday. “Because population growth is slowing while productivity is surging—a rather unusual combination.”
Hassett added that one plausible scenario could be: “lagging job creation, surging productivity, surging profits, and surging GDP.”
Signs of Labor Market Deterioration Are Already Emerging
Multiple recent signals indicate the labor market is deteriorating.
BLS data show that job openings plunged in December to their lowest level since September 2020; meanwhile, workforce consulting firm Challenger, Gray & Christmas reported that both planned layoffs and hiring in January marked the worst January performance since the 2009 global financial crisis; additionally, ADP’s report showed only 22,000 jobs added in the private sector in January.
Nonetheless, some positive signs remain: Homebase data show small-business job growth rose to 3.3% last month—up from 3.1% in January 2025 and well above 1.3% in the same period last year.
Fed Stance: More Concerned About Inflation, Not Rushing to Cut Rates
From the Federal Reserve’s perspective, policymakers focus on employment trends over time—not on single-month figures. Most officials anticipate that slower hiring coupled with low layoff rates does not signal substantive economic weakness but rather points toward stability.
In remarks on Tuesday, Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack both expressed confidence in the U.S. economy’s progress—but voiced greater concern about inflation than unemployment, and questioned the necessity of further rate cuts.
“Rather than fine-tuning the federal funds rate, I prefer to remain patient, assess the impact of recent rate cuts, and monitor economic performance,” Hammack said. “Based on my forecast, we may hold rates steady for quite some time.”
Federal Reserve Governor Lisa Cook, speaking earlier this month, said she believes last year’s rate cuts will continue supporting the labor market. She noted the labor market has stabilized and is roughly in balance, adding that policymakers remain highly alert to potential rapid shifts. Similarly, Governor Philip Jefferson suggested the labor market may be in balance, characterized by low hiring and low firing.
The CME Group’s FedWatch Tool shows the market currently assigns roughly a 15% probability to a 25-basis-point rate cut in March.
Potential Market Reaction
FXStreet analysts suggest that if the nonfarm payrolls report disappoints—e.g., job growth falls below 30,000 and the unemployment rate unexpectedly rises—the U.S. dollar could come under immediate pressure. Conversely, if the nonfarm payrolls figure meets or exceeds consensus, it could reaffirm expectations that the Fed will hold policy steady next month. Market positioning suggests the dollar still has room to rally in that scenario.
Investors will also closely scrutinize wage-inflation components in the report. Even if headline nonfarm payrolls meet expectations, subpar average hourly earnings growth would likely limit upside for the dollar.
Analysts at Danske Bank note that slowing wage growth could negatively affect consumer activity and pave the way for a more dovish Fed stance.
They explain: “The Challenger Gray & Christmas report shows January layoffs exceeded expectations, while December job openings stood at 6.5 million—below the 7.2-million consensus—pushing the ratio of job openings to unemployed persons down to 0.87. This cooling is typically a good harbinger of slowing wage growth, raising concerns about the private consumption outlook—and, all else equal, bolstering the case for an earlier Fed rate cut.”
The market’s current calm is precisely a harbinger of the storm ahead. Gold prices halted a two-day rally on Tuesday, though the pullback was largely “event-driven” consolidation.
David Meger, Head of Metals Trading at High Ridge Futures, noted that such consolidation is a natural market reaction ahead of major economic data releases. Faced with uncertainty, investors often lock in some profits or temporarily step aside—exerting downward pressure on gold.
Despite short-term volatility, the fundamental drivers supporting gold’s long-term upward trajectory remain intact—and have even strengthened. First, a weaker dollar supports gold. On Tuesday, the U.S. Dollar Index fell to its lowest level since January 30, pressured by soft U.S. retail sales data. A weaker dollar makes dollar-denominated gold cheaper for overseas buyers, boosting demand.
Second, signals from the bond market also favor gold. On Tuesday, U.S. Treasury yields declined across the curve—reflecting intensifying market concerns about slowing economic growth and rising expectations for Fed rate cuts. Falling bond yields enhance gold’s relative appeal.
Lastly—and perhaps most importantly—geopolitical tensions continue fueling a sustained “safe-haven premium,” providing ongoing momentum for gold bulls.
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