The initial jobs report for 2024, scheduled for release at 8:30 am ET on Friday, is anticipated to highlight the robustness of the US economy, despite facing 11 rate hikes from the Federal Reserve. This labor market overview follows Federal Reserve Chair Jerome Powell’s recent optimistic remarks regarding the healthy economy and decreasing inflation. However, Powell cautioned that there is still progress to be made before achieving a definitive soft landing, where inflation decreases without causing a rise in unemployment.
Economists express confidence in the labor market’s ability to maintain a soft landing trajectory. Projections indicate an expected monthly job gain of 176,500, with the unemployment rate predicted to edge up to 3.8% from 3.7%, although it will remain below 4% for the 24th consecutive month, according to FactSet consensus estimates.
Nevertheless, the January jobs report presents unique challenges. This month typically witnesses significant job losses as seasonal workers are laid off post-holidays, and companies implement cost-cutting measures at the start of the year. Sarah House, a senior economist with Wells Fargo, emphasizes the difficulty in forecasting due to the introduction of new seasonal adjustment factors for the most seasonal month. Additionally, the milder December weather may have supported hiring during that period, adding complexity to the analysis.
The Bureau of Labor Statistics (BLS) applies seasonal adjustment factors annually in January to smooth out data and reveal underlying trends. There is potential for an upside surprise in the numbers, as EY anticipates a monthly gain of 275,000 jobs.
The upcoming jobs report will also incorporate the final annual benchmark review of payroll data for the 12 months ending in March 2023. Preliminary data suggested weaker job growth than initially estimated, indicating a shortfall of 306,000 jobs (approximately 25,000 fewer per month). Analysts expect the final revision to closely align with the preliminary revision, providing a comprehensive view of the employment landscape.