NFP Preview: Forecasts From Four Major Banks

The US Bureau of Labor Statistics will release the January jobs report on Friday, February 4 at 13:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of four major banks regarding the upcoming employment data.

Deutsche Bank

“We are expecting NFP to have grown by a relatively subdued +150K in January (in line with consensus), with the unemployment rate remaining at a post-pandemic low of 3.9%. Clearly, Omicron will impact this data, so it’ll be tough to get a clear read through but Fed Chair Powell has already said that his personal view is that labour market conditions were consistent with maximum employment, “in the sense of the highest level of employment that is consistent with price stability’.”

TDS

“Payrolls likely plunged in January, but only because of temporary Omicron fallout; if anything, we see downside risk to our -200K estimate. Several Fed officials have already made clear that they will discount weak data as temporary. Also, we see upside risk on average hourly earnings, with an already strong trend likely to be added to by temporary Omicron effects relating to the composition of payrolls and the length of the workweek. Our 0.6% MoM estimate for hourly earnings implied 5.3% YoY, up from 4.7% YoY in December.”

CIBC

“With activity in service sectors infected by Omicron in January, causing jobless claims to rise, hiring likely slowed to a 102K pace. Most of the impact from Omicron will be on display in a reduction in hours worked in sectors that experienced tighter restrictions and consumer caution, along with worker absenteeism related to infections. As a result, the unemployment rate likely ticked up to 4.0%, while wage growth could have remained hot at 0.5% as job gains were tilted towards higher-paying sectors. We’re below the consensus, which could weigh on the greenback and bond yields.”

ING

“The January jobs report is likely to be weak, with a payrolls gain of just 100K expected. The risks are likely to be to the downside given the sharp drop-off in activity and higher-than-expected jobless claims since the Omicron wave hit. Admittedly there are more than 10 million job vacancies right now, but consumer and business caution has been heightened by the latest pandemic developments and hiring is set to have slowed. Nonetheless, we remain hopeful that with covid case numbers now falling in many states, we will start to see consumers re-engage with the economy. That should pave the way for much stronger activity and job readings in February and March.”