WASHINGTON (Reuters) – The U.S. economy likely created 166,000 fewer jobs in the 12 months through March than previously estimated, the Labor Department’s Bureau of Labor Statistics said on Wednesday.

The reading is a preliminary estimate of the BLS’ annual “benchmark” revision to the closely watched payrolls data. The leisure and hospitality sector, which was hardest hit by the COVID-19 pandemic, accounted for the bulk of the revision, with employment growth revised down by 597,000 or 4.6%.

Leisure and hospitality employment is 1.7 million below its peak in February 2020, though the industry has led the labor market recovery from the pandemic.

“It is somewhat ambiguous what this means for future employment in this sector beyond March 2021,” said Daniel Silver, an economist at JPMorgan in New York.

“This could suggest that more jobs need to be added to return closer to pre-pandemic levels but also that the pandemic-related hit to that sector was more severe and or longer-lasting than previously reported.”

But the transportation and warehousing sector added 247,900 more jobs than previously thought, while professional and business services payrolls were revised up by 214,000. Government employment was raised by 255,000 jobs.

Once a year, the BLS compares its non-farm payrolls data, based on monthly surveys of a sample of employers, with a much more complete database of unemployment insurance tax records.

A final benchmark revision will be released in February along with the BLS’ report on employment for January. Government statisticians will use the final benchmark count to revise payroll data for months both prior to and after March.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)