This is bad.

Pull out both axles and check the bearing for damage. Check the housing bearing sockets for damage also
Get some plastigauge and center a small piece of it on one of the axle ends and install. Install the second axle. Be sure to not rotate the axles. Torque the bearing retainers to spec. Do not rotate, just unbolt and remove the first axle. See if the plastigauge is compressed and if so, measure how much. If it is compressed fully, you have imterference on the axle length. If plastigauge is not disturbed, your problem is not the axle length. I hope this helps. I recently did this on my 8.75 and discovered my old thrust bearings were not the issue. It was with my new disc brake setup.