U.S. employment gains likely slowed in January as the boost to hiring from unseasonably mild weather faded, but an expected rebound in wages and a steady jobless rate will suggest the labor market recovery remains firm.
Nonfarm payroll is expected increased by 189,000 jobs last month, according to Forexfactory.com
Though that would be a sharp step-down from the 292,000 jobs created in December and the average 284,000 positions per month in the fourth quarter, it would largely reflect payback after the warmest temperatures in years bolstered hiring in weather-sensitive sectors like construction.
"Payroll growth has been running above trend over the past three months," said Dana Saporta, an economist at Credit Suisse in New York. "It's reasonable to expect a slower pace of payroll growth in the January data. Anything close to forecast will provide further evidence the labor market is still very strong."
Against the backdrop of tightening financial market conditions, a deceleration in employment growth would further undercut the case for a Fed interest rate hike in March. The U.S. central bank raised its short-term interest rate in December for the first time in nearly a decade.
"We should recognize that the fourth quarter (job growth) was bloated by favorable weather conditions and January was not," said Ray Stone, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey.
"If I were on the Federal Reserve's policy committee, it would not really change my mind. Markets have been turbulent, financial conditions are less accommodative now ... I may be less inclined to tighten now that I was in December."
Reference: Reuters, Forexfactory
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