by Calculated Risk on 2/06/2025 03:05:00 PM
On Friday at 8:30 AM ET, the BLS will release the employment report for January. The consensus is for 170,000 jobs added, and for the unemployment rate to be unchanged at 4.1%.
There were 256,000 jobs added in December, and the unemployment rate was at 4.1%.
IMPORTANT NOTE: For the household survey, new population controls will be used – and this will boost overall household employment. For the establishment survey, the annual benchmark revision will be included, lowering past headline job growth.
We estimate nonfarm payrolls rose by 190k in January, above consensus of +170k … We assume that the Los Angeles wildfires and colder-than-usual weather will each subtract 20k from January job growth. … We estimate that the unemployment rate was unchanged at 4.1%, in line with consensus
emphasis added
From BofA:
We forecast a 200k increase in nonfarm payrolls (170k private) in Jan. The u-rate should remain steady at 4.1%. The Jan jobs report will be impacted by the wildfires & snowstorms, potential residual seasonality, and annual revisions.
• ADP Report: The ADP employment report showed 183,000 private sector jobs were added in January. This was above consensus forecasts and suggests job gains above consensus expectations, however, in general, ADP hasn’t been very useful in forecasting the BLS report.
• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires). The ISM® manufacturing employment index increased to 50.3%, up from 45.4% the previous month.  This would suggest about 15,000 jobs lost in manufacturing. The ADP report indicated 13,000 manufacturing jobs lost in January.
The ISM® services employment index increased to 52.3%, from 51.3%. This would suggest 110,000 jobs added in the service sector. Combined this suggests 95,000 jobs added, far below consensus expectations. (Note: The ISM surveys have been way off recently)
• Unemployment Claims: The weekly claims report showed slightly more initial unemployment claims during the reference week at 223,000 in January compared to 220,000 in December. This suggests slightly more layoffs in January compared to December.
• Conclusion: Over the last 9 months, employment gains averaged 160 thousand per month – and that is probably the current trend. With some impact from the cold weather, my guess is headline employment will be less than consensus in January.
