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January’s Jobs Report: Analysts’ Expectations

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US jobs report

The Department of Labor (VTI) is scheduled to release the January employment data on February 1. The report’s immediate market-moving impact declined after Fed Chair Jerome Powell’s comments at the beginning of January. He said that the Fed could be more patient with the rate hikes. The data will likely gauge the economy’s overall health and the future rate hike path. A large swing in the numbers on the upside or downside could move the market. Therefore, investors should understand the report’s expectations before the actual numbers come out.

Expectations versus reality

Now that the Fed has signaled a “wait and see” approach and a sudden interest rate hike (TLT) (BND) is more or less out of the way, analysts want a healthy jobs report. A strong jobs report would mean continued strength in the US economy, which would likely strengthen investors’ confidence.

As we highlighted in Why the Fed Could Be in a Dilemma after Strong US Jobs Report, the markets (SPY) (DIA) were trading higher after the stronger-than-expected jobs report was released for December.

Jobs report and equity markets

The US jobs report for December, which was released on January 4, beat economists’ expectations. The job additions in the United States rose by 312,000 and beat economists’ expectations of 180,000. There were also upside revisions in the job additions in October and November. The average hourly earnings, the most closely watched part in the jobs report, rose 3.2%—compared to the same period the previous year.

The strong job report gave additional strength to the tight labor market argument. Next, we’ll discuss the wage growth expectations in January.

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