U.S. payroll gains seen picking up, benchmark revisions under spotlight

U.S. job growth likely picked up in January, with unseasonably mild temperatures seen boosting hiring in the weather-sensitive sectors, indicating the economy will probably continue to grow moderately despite a deepening slump in business investment.  The Labor Department’s closely watched monthly employment report on Friday is, however, expected to show job gains from April 2018 through March 2019 were not as robust as originally estimated. Any steep downgrade to payrolls during that period would suggest a significant slowdown in job growth this year.

According to a Reuters poll of economists, the government’s survey of establishments will probably show nonfarm payrolls increased by 160,000 jobs in January, likely driven by hiring in construction and leisure and hospitality industries. While that would be higher than the 145,000 jobs created in December, payrolls would be below the monthly average of 176,000 jobs in 2019. Employment gains are seen slowing in February as the coronavirus, which has killed hundreds in China and infected thousands globally, disrupts supply chains, especially for electronics producers such as Apple (AAPL.O).

The unemployment rate is forecast unchanged at near a 50-year low of 3.5% in January. The low jobless rate and anecdotal evidence of worker shortages have not spurred stronger wage inflation. Average hourly earnings are forecast rising 0.3% last month after edging up 0.1% in December. That would lift the annual increase in wages to 3.0% in January from 2.9% in December. Federal Reserve Chairman Jerome Powell said last month the United States’ low labor force participation, relative to those of other advanced economies “represents more labor supply and it may be holding down wages.”