United States: NFP gap narrows – Standard Chartered

Standard Chartered economists Dan Pan and Steve Englander note that recent QCEW data validate softer NFP readings in late 2025, when government shutdown effects and DOGE layoffs weighed on employment. They highlight that the new birth-death model and a stabilising economic cycle have narrowed the NFP-QCEW gap, increasing confidence that 2025 and early 2026 labour market data show a firmer footing.

QCEW validation supports softer NFP

"The latest QCEW release confirmed the soft NFP readings in Q4-2025 driven by the government shutdown and DOGE-related deferred resignations."

"The QCEW data showed that employment grew by 1.3% from March to December 2025, slightly higher than NPF growth of 1.2%. This suggests that the overstatement issue in NFP estimates over the past couple of years may have become less of a problem since March 2025."

"Unlike the large downward benchmark revisions in 2023 and 2024, the upcoming preliminary benchmark revision in September may finally validate the NFP estimates in 2025."

"The new birth-death (B-D) model may have helped to better align NFP with the QCEW."

"We now have greater confidence in recent NFP readings given the narrow gap between QCEW and NFP at end-2025. With monthly NFP averaging 76k since the beginning of 2026, the labour market seems to have found a better footing in recent months."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)