January Jobs Report: Hiring Cools, Unemployment Steady
Key Points:
* Non-farm payrolls expected to rise by 170,000 in January
* Unemployment rate forecast to remain stable at 4.1%
* Average hourly earnings projections: +0.3% month-over-month, +3.8% year-over-year
* Labor market slowdown evident, but layoffs remain low
* ADP private payrolls rose by 183,000 in January
* Fed likely to maintain current stance on monetary policy
Details:
The January jobs report is anticipated to indicate a moderation in hiring at the start of 2025. Economists predict a gain of 170,000 non-farm payrolls, while the unemployment rate is expected to hold steady at 4.1%.
In December, the US economy added a robust 256,000 jobs, exceeding expectations. The unemployment rate declined to 4.1% from 4.2%.
Despite economic uncertainty, EY senior economist Lydia Boussour believes the January jobs report will provide reassurance about the economy's health. She expects nonfarm payrolls to increase by 190,000, exceeding consensus estimates.
According to the CME FedWatch Tool, investors currently assess a 50% probability of the Federal Reserve cutting interest rates at its June meeting.
Additional Data:
Recent data indicates a labor market slowdown, but not a rapid decline. As of December, 7.6 million job openings remained open, a decrease from November but a record drop since 2023. The hiring rate and quits rate have also stabilized.
Private payrolls expanded by 183,000 in January, according to ADP.
Fed Chair Jerome Powell has characterized the labor market as "broadly stable." While job creation has slowed, unemployment remains low, suggesting a strong economy for those employed.
Market Implications:
Economists believe the January jobs report aligns with Powell's assessment of the labor market. Jefferies US economist Tom Simons expects the report to have minimal impact on the Fed's monetary policy stance.