Nonfarm Payrolls Preview
The Jan. Employment Situation, which includes Nonfarm Payrolls and the Unemployment Rate, will be released Friday at 8:30am EST. The consensus estimate for Nonfarm Payrolls is 70k against December’s dismal 18k. Unemployment is expected to remain unchanged at 5.0% after ticking up 0.3% in last month’s report. Average Hourly Earnings m-o-m are expected to decelerate to 0.3% after last month’s 0.4%. Average Weekly Hours are expected to remain unchanged at 33.8.
Conflicting data on the upside this week included ADP Employment, which came in at 130k, 3 times higher than expectations. On the downside, Initial Jobless Claims today climbed the most since Hurricane Katrina, jumping 69k to 375k. However, it should be noted Jan. Initial Jobless Claims have been rather benign at 322k, 306k and 301k.
Given Jan. ADP Employment and previous Initial Jobless Claims this month, it looks as though Nonfarm Payrolls data have some upside potential despite today’s jump in Initial Claims. The x-factor may be government hires as widespread reductions in tax revenue, due to dipping property values and consumer spending, may have led to hiring freezes.
The change in the Unemployment Rate was a recession-like 0.3% in the Dec. Employment Situation. An uptick in the Unemployment Rate on the order of December’s is very unlikely, but if January data does show an increase the chances of a recession will certainly increase as well.