On Friday, the Bureau of Labor Statistics will publish its jobs report for January. This month’s report will take on added significance because it will include its annual benchmark revision and updated seasonal adjustment factors of the establishment survey, which includes nonfarm payrolls, employment, hours and earnings data.
The report will also include new population controls used in the household survey estimate. The household survey is used to determine the unemployment rate.
We think that the establishment survey, which gathers data from businesses and the government, will feature a decline in total employment of around 700,000, which will result in a decline in monthly employment gains to around 140,000 per month.
Another area of focus, in the household survey, will be the unemployment rates of native-born and foreign-born workers. In December, the jobless rate of workers born in the United States stood at 3.7% while it was 4.3% for workers born out of the country.
With tighter immigration policies and the chance of large scale deportations, that difference will be an area of interest when it comes to the path of interest rate policy should a tight labor market result in an increase in wage inflation.
Read more of RSM’s insights into the economy and the middle market.
We expect a net gain in the January jobs report of 185,000 positions and an increase in the unemployment rate to 4.2%, which approximates full employment in our estimation.
We also expect average hourly earnings to increase by 0.3% on the month and by 3.8% from a year ago.
The American labor market remains balanced and may grow tight depending on the policy choices of the current administration.
