TLDR:
- January 2025 jobs report forecasts 170,000 new jobs, down from December’s 256,000
- Unemployment rate expected to remain steady at 4.1%
- Job openings dropped to 7.6 million in December, largest decrease since October 2023
- Private payrolls showed 183,000 additions in January according to ADP data
- Federal Reserve unlikely to cut interest rates before June 2025
The United States job market is expected to show slower growth in January 2025, according to economists surveyed by Bloomberg. The upcoming Bureau of Labor Statistics report, scheduled for release Friday morning, is projected to reveal 170,000 new non-farm jobs added to the economy, a decrease from December’s robust addition of 256,000 positions.
The unemployment rate is forecast to hold steady at 4.1%, maintaining the level seen in December. This stability comes as the broader labor market shows signs of gradual cooling rather than sharp decline.
Average hourly earnings, a key measure of wage growth, are expected to increase by 0.3% month-over-month, matching December’s pace. The year-over-year wage growth is anticipated to slightly decrease to 3.8% from the previous 3.9%.
The average workweek is predicted to remain unchanged at 34.3 hours, suggesting employers are maintaining steady schedules for their current workforce.
Recent data from the Bureau of Labor Statistics revealed a decrease in job openings, with 7.6 million positions available at the end of December. This marks a drop from November’s 8.15 million openings and represents the largest monthly decline since October 2023.
Despite the cooling in job openings, other employment indicators have remained stable. The hiring rate stayed flat at 3.4%, while the quits rate, which measures worker confidence in finding new employment, held steady at 2%.
Private sector employment, as reported by ADP, showed 183,000 new jobs added in January, a slight increase from December’s 176,000 additions. This data suggests continued job creation, albeit at a more measured pace than seen in previous months.
EY senior economist Lydia Boussour expects the January report to exceed consensus expectations, projecting 190,000 new jobs. However, this would still represent a slowdown from December’s performance.
Federal Reserve Watching
The Federal Reserve is closely monitoring employment data as it considers future interest rate decisions. Current market expectations, according to the CME FedWatch Tool, indicate less than a 50% probability of an interest rate cut before June 2025.
Fed Chair Jerome Powell recently described the current labor market as “broadly stable” during his January 29 press conference. He noted that while employed individuals remain in a strong position, job seekers face more challenges as hiring rates have decreased.
The December jobs report surprised economists with its strength, adding 256,000 positions compared to lower expectations. The unemployment rate also improved, dropping to 4.1% from November’s 4.2%.
Wage growth trends continue to be closely watched by economists and policymakers. The expected 3.8% year-over-year increase in average hourly earnings would represent a slight moderation in wage pressure.
The job openings decline in December suggests employers may be becoming more cautious in their hiring plans. However, the steady hiring and quit rates indicate the labor market is experiencing a gradual adjustment rather than a sharp downturn.
Jefferies US economist Tom Simons suggests the upcoming jobs report is unlikely to alter the Federal Reserve’s current monetary policy stance, given Powell’s recent comments about being in “no hurry” to implement additional rate cuts.
The January employment report will be released at 8:30 a.m. ET on Friday, providing fresh insights into the health of the US labor market at the start of 2025.
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