Here comes the jobs report...
- Economists forecast the US added 165,000 jobs in January.
- Wage gains were expected to hold above 3%.
- The partial government shutdown could have affected numbers, however.
Offering the latest snapshot of the US economy, the official employment report out Friday is expected to show hiring continued at a healthy pace in January and that wages increased modestly despite the longest partial government shutdown in history.
Economists polled by Bloomberg forecast 165,000 nonfarm payrolls were added at the start of 2019, bringing the labor market into a historic 100th month of job gains. While that figure is sharply lower than December's 312,000 job increase, the decline is expected.
"We have few doubts that labor demand remained strong in January, but the chance of a repeat of December's 312,000 payroll gain is slim," said Ian Sheperdson, the chief economist at Pantheon Macroeconomics. "It's true that businesses appear to be searching for huge numbers of people, but it's also true that since mid-2017 they haven't been able to find as many as they'd like."
The unemployment rate is expected to hold steady at 3.9%, its lowest level since 2000, while average hourly earnings are expected to grow at a pace above 3% from a year earlier. In the 12 months ending in December, wages rose 3.1% to post their best gains since June 2008.
The partial government shutdown that ended last Friday, which was the longest on record, could have a slight impact on the report. The five-week disruption left 800,000 federal employees furloughed or forced to work without pay and was expected to cost the economy $11 billion, about a third of which may never be recovered.
It probably didn't directly affect the headline number of hiring figures, But it could show up in the unemployment rate, which is based on a survey of households rather than employers. Indirect effects, such as contractors and private sector employees who lost work due to the shutdown, could be less clear.
Even though the shutdown was not expected to interrupt the average 200,000 jobs per month that have been added over the last decade, some in the White House have been bracing for weaker-than-expected results. Recent polls suggest a majority of Americans blamed the president for a fourth of the government temporarily closing.
"So, what we'll say if we were to see that negative number is, 'Well, sure it was negative this, but if you adjust for the furlough, it looks like another plus-200 month,'" Council of Economic Advisers chairman Kevin Hassett told reporters last month.