January Jobs Report Anticipated to Reveal Hiring Slowdown

Economists forecast a tempered hiring pace in the upcoming January jobs report, slated for release on Friday at 8:30 a.m. ET. Consensus estimates predict a non-farm payroll increase of 170,000, with the unemployment rate remaining steady at 4.1%.

The December jobs report surpassed expectations, with a substantial 256,000 jobs added and a decline in the unemployment rate from 4.2% to 4.1%.

Despite recent market concerns, EY senior economist Lydia Boussour expects a positive indication of economic health from the January report. She anticipates nonfarm payrolls to rise by a solid 190,000, exceeding consensus expectations.

According to CME FedWatch Tool, investors assess the likelihood of a Federal Reserve interest rate cut by June to be less than 50%.

Bloomberg data indicates Wall Street's expectations for the report:

* Nonfarm payrolls: +170,000 (Previous: +256,000)
* Unemployment rate: 4.1% (Previous: 4.1%)
* Average hourly earnings, month over month: +0.3% (Previous: +0.3%)
* Average hourly earnings, year over year: +3.8% (Previous: +3.9%)
* Average weekly hours worked: 34.3 (Previous: 34.3)

Recent data suggests a modest labor market slowdown, characterized by low layoffs. The Bureau of Labor Statistics reported 7.6 million job openings as of December, a decrease from November's 8.15 million, marking the sharpest sequential drop since October 2023.

However, other indicators remained steady. The Job Openings and Labor Turnover Survey (JOLTS) showed a flat hiring rate at 3.4%, while the quits rate, indicating worker confidence, remained unchanged at 2%.

ADP data released on Wednesday indicated an increase in private payrolls to 183,000 in January, up from 176,000 in December.

Economists generally align with Fed Chair Jerome Powell's recent description of a "broadly stable" labor market. Despite a low hiring environment, Powell noted that job security remains strong.

Jefferies US economist Tom Simons expects the January report to align with Powell's assessment and not significantly impact the Fed's monetary policy stance. Simons emphasized that Powell has expressed a cautious approach towards further rate cuts.