Here's your quick guide to tonight's US jobs report

Get ready for jobs day.

On Friday at 8:30 a.m. ET, the Bureau of Labour Statistics will release the January jobs report.

Via Bloomberg, here’s what Wall Street is expecting:

  • Nonfarm payrolls: +190,000
  • Unemployment rate: 5.0%
  • Average hourly earnings month-on-month: 0.3%
  • Average hourly earnings year-on-year: 2.2%
  • Average weekly hours worked: 34.5

Last month, the US labour market was on fire as the economy added 292,000 jobs. But after the rocky month for stocks, less-than-stellar corporate profits, and continued lower oil prices, many economists aren’t expecting a repeat slam dunk in January.

“While the pace of employment gains remains about the level needed to absorb slack in the labour market, January is expected to be the weakest month since last September, which incidentally preceded the Fed’s decision to forgo hiking rates,” wrote TD Securities’ David Tulk. “As domestic momentum slows, we expect the pace of job growth to reflect some of the strains emerging in the economy.”

“Labour market indicators were weaker in January, with declines in the employment components of both the ISM manufacturing and non-manufacturing surveys and rising jobless claims,” wrote Goldman Sachs’ John Hatzius.

Notably, as Business Insider’s Akin Oyedele observed, although Goldman Sachs usually outlines reasons why a jobs report could be strong, neutral, or weak, their latest preview did not include anything on why the report might be great — which further suggests that analysts aren’t feeling so great about Friday’s report.

Keep your eyes on manufacturing

Economists are worried about one part of the jobs report in particular: manufacturing.

“Incoming data continue to suggest that the manufacturing sector remains hampered by weakening demand due to lower oil prices and the stronger dollar while the rest of the economy is resilient,” writes a Nomura’s Lewis Alexander.

“As such, we expect manufacturing payrolls to recede by 5k jobs and the bulk of the job gains to come from the service providing sector.”

He outlined some of the recent ugly data with respect to manufacturing:

“Employment indicators from manufacturing surveys have been negative. The national ISM manufacturing employment index declined further in January to 45.9 from 48.0, implying employment contracted at a faster pace in January compared to December. The Chicago PMI employment indicator improved but remained below 50 at 48.9 in January. The number of employees index from the Empire State survey remained at depressed levels, while the comparable index from the Philly Fed survey turned slightly negative after positive readings in the prior two months.”

It wouldn’t be a proper economics report without the weather

One other factor that could affect the report is the weather, argues Alexander. Specifically the fact that it it finally got cold in January after the unusually long-lasting warm weather in late 2015.

“We find that the unseasonably warm weather in the past several months likely had a positive, albeit transitory, impact on economic activity in late 2015. Our analysis suggests that we should see some reversal in activity in weather-sensitive industries, as weather has returned closer to traditional norms. As such, we see downside risk to job growth in the construction sector and other weather sensitive-sectors,” he wrote.

And on a somewhat related note, since the holidays finally ended, some of the sectors picked up speed in November and December may have returned to a more modest pace of hiring.

In particular, Goldman Sachs’ John Hatzius pointed to the possibility of a decline in couriers and messengers’ employment (i.e. package delivery workers) of about 10-20k.

Seasonal quirk or something bigger?

But most importantly, economists will be looking to see whether the January jobs report is a sign Q4 slowdown is starting to show in the labour market or if this report might just be a seasonal quirk that will be revised up later.

“When the economy is at a turning point, the labour market always responds last, as employers turn to layoffs as a last resort during hard times. This Friday, markets will be watching closely for clues that we’ve successfully dodged yet another possible slowdown,” mused Glassdoor’s chief economist Andrew Chamberlain.

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