U.S. Hiring Momentum May Endure Even as Pace Trails Last Year’s

(Bloomberg) -- Economists are looking for U.S. payroll gains to start the year with a sturdier reading than the prior month, another sign that the labor market is holding up even if hiring trends aren’t as strong.

Labor Department data due at 8:30 a.m. Friday in Washington will show 165,000 jobs were added in January as private hiring rise to 155,000, according to Bloomberg’s survey of economists. The jobless rate is seen holding at a half-century low of 3.5%, while annual wage growth improved to 3% from a 17-month low of 2.9%.

U.S. Hiring Momentum May Endure Even as Pace Trails Last Year’s

“We’re looking for a healthy employment report in January, but one that confirms a gentle cooling of the U.S. economy,” said Gregory Daco of Oxford Economics. He sees a 162,000 gain.

Other measures signal strength. The ADP Research Institute on Wednesday reported that firms added 291,000 jobs in January, the most since 2015. Unemployment benefit filings are lowest since April, and the Conference Board’s labor differential, which shows the share of consumers who say jobs are plentiful exceeds those who say they’re hard to get, is near the highest since 2000.

The Federal Reserve last week kept policy on hold while affirming solid hiring. “The labor market continues to be strong,” Chairman Jerome Powell told reporters. “We see strong job creation. We see low unemployment.”

U.S. Hiring Momentum May Endure Even as Pace Trails Last Year’s

Here’s what economists are saying, with payroll projections listed from low to high:

Credit Suisse

  • 145,000 jobs, 3.5% unemployment, 2.9% annual wage gain
  • “We expect ongoing moderation,” Chief Economist James Sweeney wrote. “Lead indicators have been solid, with the ISM non-manufacturing employment index holding its gains after a rebound and initial claims reverting back to the low-200s range.”

S&P Global Ratings

  • 150,000 jobs, 3.5% unemployment, 3% annual wage gain
  • “Firm consumer confidence readings, including a boost in the labor market differential, and a slip in jobless claims all point to a healthy jobs market for the month,” U.S. Chief Economist Beth Ann Bovino wrote. “Labor market conditions will likely remain healthy in 2020. We expect solid employment growth of about 150,000 average per month in the first half of the year, in tandem with increased prime-aged employment growth.”

Morgan Stanley

  • 155,000 jobs, 3.5% unemployment, 3.1% annual wage gain
  • “Sector swings to watch for this month are professional and business services and transportation and warehouse payrolls,” which could rebound from December weakness, Chief U.S. Economist Ellen Zentner wrote. “On the flip side, retail trade payrolls had an unusually strong gain in December so could reverse downwards in January. How these swing factors resolve should be taken into consideration when gauging underlying trends in January.”

Bloomberg Economics

  • 160,000 jobs, 3.5% unemployment, 3.1% annual wage gain
  • “While moderating economic growth in 2020 could temper the pace of hiring, it will not disrupt the gradual, upward sloping trend of wage pressures and labor-cost inflation,” economists Carl Riccadonna, Yelena Shulyatyeva and Andrew Husby wrote. “Average hourly earnings may have missed to the downside in December, but one month is hardly a trend -- in fact, the trend has been in line with what should be expected as labor slack diminishes.”

Wells Fargo

  • 160,000 jobs, 3.5% unemployment, 3% annual wage gain
  • “Given the instrumental role that the consumer plays, elevated confidence in the labor market is supportive to our call for extended economic expansion,” Senior Economist Sam Bullard wrote. “The labor market remains strong across most measures, though there are signs of deceleration. While job cuts remain low, openings are trending down.”

NatWest Markets

  • 165,000 jobs, 3.5% unemployment, 3.1% annual wage gain
  • “We expect further moderation in the trend in payroll growth in 2020,” consistent with slower output growth relative to last year’s 2.3% fourth-quarter-to-fourth-quarter pace, Kevin Cummins and Michelle Girard wrote. “We expect the jobless rate remained steady at 3.5% in January, which would coincide with consumers’ favorable assessment of the labor market.”

Citigroup

  • 187,000 jobs, 3.5% unemployment, 3% annual wage gain
  • “A stronger-than-consensus increase in jobs, as we expect, would support the risk-on movement in markets, following other stronger U.S. data releases this week such as ISM manufacturing,” economist Veronica Clark wrote. “Following a weaker-than-expected December employment report that revealed moderate job growth, softer wages, and revisions lower to average hours worked, we expect a stronger January report will reaffirm that the labor market remains healthy overall.”

©2020 Bloomberg L.P.

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