Five Things to Watch in the January Jobs Report

The U.S. government releases its broad measure of the January labor market on Friday. Economists surveyed by The Wall Street Journal expect the Labor Department to report employers added 170,000 jobs during the month and the unemployment rate held at 3.9%. Here are five things to watch in the report.

1. Shutdown Spillover

The long partial federal government shutdown was January’s dominate economic news, but investors will be watching carefully to determine if Washington’s dysfunction impacted the broader landscape. To do that, keep an eye on the change in private-sector payrolls. Last year, private employers added an average of 213,700 jobs each month. (All levels of government added an average 6,200 a month.) If the private figure is close to average, that would be a sign most businesses shrugged off the shutdown. A figure below 100,000 could point to more significant negative effects. The Labor Department said furloughed federal employees will be counted as being on payrolls, but additional public-sector hiring was likely limited during the month.

2. Happy 100

If U.S. employers add to payrolls in January, as expected, it would would mark 100 straight months of job creation. The streak, which began in October 2010, is more than twice as long as the next longest stretch of continuous employment growth, the 48 months ending in June 1990. But the intensity of hiring during the current stretch is relatively lackluster among the eight streaks of job gains that lasted more than two years, on record back to 1948. Employers have added an average of 201,000 jobs per month during the current stretch. Only hiring during the expansion that ended in 2007—sometimes called the jobless recovery—was weaker.

3. Wacky Rate

Economists expect the unemployment rate to hold steady from December at just above a 49-year low. But don’t be stunned if the jobless rate edges higher. Furloughed federal employees who did not work at all during the survey week, the week including the Jan. 12th, should be classified as unemployed on temporary layoff, the Labor Department said. More than 300,000 federal workers off the job could cause the unemployment rate to rise. However, the readings depend greatly on how households answer survey questions. After the 2013 shutdown, the department warned against reading too deeply into the data because respondents misunderstood the questions and reported themselves as absent from work, rather than laid off.

4. Revision Watch

The January report will also include the Labor Department’s annual revision to previously released data, which could impact employment figures back to January 2014. The department revises data from the survey of employers to reflect the comprehensive count of jobs as of March 2018, based on tax records. It also updates its seasonal-adjustment calculations. A preliminary report, released in August, showed the benchmark revision would cause an upward adjustment to March 2018 nonfarm employment of 43,000, an extremely small revision to total payrolls of about 150 million.

5. Pay Raise?

Average hourly wages for private-sector workers have risen at better than the 3% rate from a year earlier each month since October. Economists project that pace to be sustained in January. Prior to last fall, wage growth hadn’t been that strong since the recession ended in 2009. Rising wages would be a sign the labor market remains tight and employers are increasingly competing with one another for workers during a period of historically low unemployment.

from Real Time Economics https://on.wsj.com/2t66RNz