Monthly nonfarm payroll gains are expected to slow in January, with comprehensive revisions also in focus.
MNI (NEW YORK) - Executive Summary
- January’s employment report will receive almost as much attention for comprehensive revisions as for the monthly nonfarm payroll gains, which are expected to slow to 170-180k from December’s strong 256k.
- January is typically a difficult month to forecast payrolls (estimates range from 135k-225k), with a pronounced seasonal pattern that includes large post-holiday layoffs.
- Wildfires in Southern California could act as a small drag this month – we have seen some estimates on the order of circa 20k – although extremely cold weather didn’t fall in the payrolls reference period.
- The unemployment rate is expected to print 4.1% for a second month, while average hourly earnings and hours worked are seen relatively steady.
- The annual revisions to the establishment survey are seen lowering the level of payrolls that had previously been registered for March 2024 by around 700k, while we’ll be closely watching the revisions to the seasonal factors for the past five years. New population controls for the household survey also feature.
- There is little to no urgency among Federal Reserve policymakers to ease policy in the near future, but a large downside miss could crack the door back open to a March rate cut.
- The revisions could make it hard to get a clean immediate read on the January data’s implications for monetary policy, but with rate cuts being priced out, the FOMC may prove more sensitive to downside than upside surprises after a period in which downside risks to the labor market appeared to have dissipated.
- PLEASE FIND THE FULL REPORT HERE: USNFPFeb2025Preview.pdf
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