What to expect in the January jobs report - Yahoo Finance

The Department of Labor is poised to deliver its January jobs report at 8:30 a.m. ET on Friday, in a print expected to show still-sold payroll growth and a modest acceleration in workers’ wage gains.

Here are the main metrics expected from the report, compared to consensus expectations compiled by Bloomberg:

• Change in nonfarm payrolls: +165,000 expected and +145,000 in December

• Unemployment rate: 3.5% expected and 3.5% in December

• Average hourly earnings month on month: +0.3% expected and +0.1% in December

• Average hourly earnings year on year: +3.0% expected and +2.9% in December

Assuming results come in as expected, job gains will have pulled back from January 2019’s surging 312,000 payroll additions. But the anticipated payroll gains for this January would come amid an unemployment rate that was most recently at a 50-year low, showing the economy still has room to add jobs even in a historically tight labor market.

“January job growth tends to accelerate in tight labor markets, as labor supply constraints may lead firms to implement fewer end-of-year layoffs,” Goldman Sachs economist Jan Hazius wrote in a note Thursday.

Other economists, including those from TD Securities, pointed out that unusually mild January weather could also be positive for January’s payrolls data.

“However, we expect offsets from payback in the retail component after a strong rise in December (currently 41K) and a somewhat weaker trend after the annual revision,” the TD Securities economists added in a note.

The January jobs report is expected to reflect 165,000 new non-farm payrolls added in January.

Meanwhile, consensus economists anticipate a slight pick-up in wage gains after a disappointing December print. In that report, average hourly earnings growth had dipped below 3% for the first time since July 2018.

“The tight labor market has led to stronger wages, though the pace of wage growth has slowed over the past year,” Wells Fargo Securities economist Sam Bullard said in a note. “With firms continuing to cite difficulty finding qualified workers, we expect employment costs to grow around their current pace this year.”

Ahead of the January jobs report, a number of other employment indicators presaged ongoing momentum in the labor market.

Weekly new unemployment claims declined in January after rising in December, “and remain consistent with a healthy labor market,” Bullard said. For the week of the January payrolls survey, or the week of the 12th, claims were lower by 12,000 relative to December.

Meanwhile, the employment component of the Institute of Supply Management’s manufacturing purchasing managers’ index climbed in January. The non-manufacturing PMI, while lower in January relative to December, held above the neutral level of 50 to indicate expansion.

And on Wednesday, ADP/Moody’s monthly report showed private payrolls climbed by the most since May 2015 in January, driven by employment gains in the services sector. Private sector payrolls rose by 291,000 in January, or well above the 199,000 from December, according to the report.

“After the ADP report revealed that private payrolls recorded their largest monthly gain in January in five years, investors may be looking for an upward surprise in tomorrow’s January jobs report,” Robin Anderson, senior economist at Principal Global Investors, wrote in an email Thursday.

The ADP/Moody’s report has not typically been a perfect indicator of the eventual Department of Labor jobs report. However, consensus economists do expect Friday’s jobs report will reflect greater increases in private payrolls versus December, or 155,000 new payrolls in January versus 139,000 in December.

This post will be updated with the January jobs report results at 8:30 a.m. ET Friday, February 7.

—

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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