January jobs, wage data may give little clarity on Fed moves

February 5, 2016

Eric Lipps, 52, waits in line to enter the NYCHires Job Fair in New York December 9, 2009. While the jobless rate has edged down, high unemployment rate remains a political headache for President Barack Obama and fellow Democrats, who are worried they will lose seats in Congress in next November's elections if faster recovery is not faster. REUTERS/Shannon Stapleton (UNITED STATES BUSINESS EMPLOYMENT POLITICS IMAGES OF THE DAY) - RTXRNTC

Those expecting January’s U.S. payrolls and wages data to add clarity to the future of U.S. monetary policy may end up more confused instead, forecasts from the most accurate economists in Reuters polls suggest.

While average earnings are forecast to have either risen in line with the 0.3 percent consensus on the month or even bettered it after not rising at all in December, payroll data will most likely be less reassuring, partly because last month’s rise, at 292,000, was so strong.

When the Federal Reserve raised the fed funds rate from a record low for the first time in December, Fed Chair Janet Yellen cited the recovering domestic labor market as a key factor in the decision.

Since then, the markets have had one of their worst starts to the year ever, which has already led to a warning from a top Fed official that financial conditions have tightened and that will have to play into the Fed’s decision-making.

The top 10 most accurate forecasters in a Reuters poll predict the U.S. economy added 198,000 jobs according to the median view, slightly higher than the wider consensus of 190,000.

The highest among them is only 217,000 to the wider poll’s maximum forecast of 256,000.
Jim O’Sullivan, chief U.S. economist at High Frequency Economics, and the top U.S. forecaster in Reuters polls for 2015, wrote in a note that he does not expect Friday’s employment report to reassure markets.

“We forecast a below-consensus 165K rise in payrolls, albeit mainly because of expected payback for exaggerated strength in Q4,” O’Sullivan wrote.

Payrolls have risen by less than 200,000 only four times in the past year.

According to the top 10 forecasters, average earnings growth, which has been slowing over the last couple of months and was flat in December, is expected to rise more sharply, by 0.4 percent on the month.

Only one of them expects wages to have risen more than the wider consensus of 0.3 percent.

 — Additional analysis by Shrutee Sarkar

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/