Here are some excepts from two research reports … first, from Goldman Sachs chief economist Jan Hatzius
Our preliminary forecast for the nonfarm payroll report is a bounceback to a 200,000 pace of increase. There are two key reasons why we expect the report to look strong … Better weather (yes, really). Although the month of January as a whole was quite cold, the payroll survey week was actually somewhat warmer than normal … Even excluding the weather impact, the December employment gain looks to be about 50,000 below the recent trend. In our view, this is implausibly weak relative to other job market measures … This could result in a bounceback to an above-trend pace even outside the weather impact, although it is also possible that the December reading will be revised up.
we see a drop in the unemployment rate from 6.7% to 6.6%, partly because the expiration of emergency unemployment benefits at yearend may have caused another drop in labour force participation and partly because we expect a good increase in household employment, which has likewise underperformed job market indicators such as claims.
From Ethan Harris at Merrill Lynch:
We forecast nonfarm payrolls to increase 185,000, an improvement from the 74,000 gain in December, but still somewhat below the recent trend. The unemployment rate is likely to slip to 6.6% from 6.7%.
Typically when poor weather conditions result in a downward bias to payroll growth, there will be a positive reversal the subsequent month when those “missing” payrolls reappear on the books. Although job growth was held back in December by the harsh weather, we do not think a strong snap-back will occur in January. … On balance, the weather in January was worse than normal, which would depress activity. While conditions improved for the survey week (since the 12th falls on a Sunday, the pay period is the week of the 13th), the rest of the month was quite cold. In particular, the week prior experienced the “polar vortex.”
The benchmark revision to nonfarm payrolls will also be released along with this report. The preliminary revision was for an upward revision of 345,000, or 0.3% of payrolls. This will impact the data from April 2012 through March 2013.
From CR: At Harris notes, the annual benchmark revision will be released with the January employment report, and the preliminary estimate is an upward revision of 345,000 jobs, however the revision would have been negative except for the reclassification of certain jobs (that weren’t previously included in the payroll report).
On the weather, it is uncertain. It was very cold in many parts of the country during January, but the weather during the survey week was decent for January. So the weather impact might be minimal.
I’ll write an employment report preview later this week after more data for January is released.
More from Calculated Risk:
- Goldman and Merrill on January Employment Report
- Schedule for Week of Feb 2nd
- Unofficial Problem Bank list declines to 590 Institutions
- Bank Failure #3 in 2014: Syringa Bank, Boise Idaho
- Reinhart and Rogoff: Great Recession may “surpass in severity” the Great Depression in many Countries