Labor market dynamics this year will most likely reflect a general slowing in monthly hiring that can be expected late in the business cycle. For this reason, we expect the economy to generate 155,000 new jobs in the January 2020 employment report, somewhat slower than the 176,000 monthly average observed in 2019.
Expect the unemployment rate to remain steady at 3.5%.
In addition, the Bureau of Labor Statistic’s benchmark revision to the March 2019 data will result in a net reduction of 501,000 in total employment. We do not anticipate that the January employment report will cause the Federal Reserve to consider changing the path of monetary policy.
Our forecast expects the unemployment rate to remain steady at 3.5%. Wage stagnation will again be evident in the report, we anticipate, with average hourly earnings increasing 0.2% on the month and 2.9% on a year-ago basis.
The three-month average annualized pace of wage gains, our preferred metric, arrived at 2.83% in December 2019 and we do not anticipate a material change in that trend. We also do not anticipate any change in hiring linked to the outbreak of the coronavirus. If that does affect hiring, that would be captured in the February data inside the trade, leisure and hospitality data, if there is any negative impact at all.
Each year, the Bureau of Labor Statistics issues a benchmark revision following the completion of comprehensive counts, derived from state unemployment tax records, for the month of March. Over the past decade, those revisions have averaged plus or minus .2% of total nonfarm employment. The B.L.S. preliminary benchmark revision indicates a reduction to the March 2019 nonfarm payrolls of 501,000, or .3% of the total employment.
The preliminary benchmark indicates that total private employment will fall by 514,000 jobs, with large downward revisions in excess of 100,000 individual jobs in trade, transport and utilities, professional business services as well as leisure and hospitalities.
Government employment will most likely be revised upward by 13,000. Inside the trade, transport and utilities data, there will probably be an upward revision of 78,000 in the transportation and warehousing sector and downward revisions of 146,000 in retail trade, 32,000, wholesale trade and 3,000 in utilities.