On Friday morning, the December employment report is anticipated to be released, which is anticipated to provide additional indications of a labor market that is decelerating towards the conclusion of 2023.
Bloomberg-compiled consensus estimates indicate that the monthly labor report from the Bureau of Labor Statistics, scheduled for release at 8:30 a.m. ET, will reveal that nonfarm payrolls increased by 175,000 in December and the unemployment rate increased to 3.8% from the previous month. The United States economy added 199,000 positions in November, while unemployment dropped unexpectedly to 3.7%.
The following are the important figures that Wall Street will be analyzing, as per Bloomberg data:
+175,000 in nonfarm payrolls, up from +199,000 previously.
The current unemployment rate is 3.8%, up from 3.7% previously.
Monthly average hourly earnings have increased by 0.3% from 0.4% previously.
Annual increase in average hourly wages: 3.9% compared to 4.0% previously.
The previous average of 34.4 hours worked per week has been increased to 34.4.
The report will determine whether the market can recover from its sluggish start to the year following a rally at the end of 2023. As a result of investor confidence that the Federal Reserve can accomplish a gentle landing—inflation declining to the 2% target—without triggering a recession—last month saw stocks approach all-time highs.
Nancy Vanden Houten, the chief US economist at Oxford Economics, wrote in a note published on Thursday, “We expect the December employment report to reveal slower job growth and further moderation in nominal wage growth, both of which the Federal Reserve wants to see as it attempts to engineer a soft landing.”
Earlier this week, data indicated that the labor market is approaching a state of greater equilibrium between the supply and demand for workers. The most recent Job Openings and Labor Turnover Survey disclosed on Wednesday that the number of job openings for November was at its lowest level since March 2021.
ADP released additional labor market data on Thursday, indicating that private payrolls expanded further than anticipated last month, while wage growth remained sluggish. In particular, ADP remarked that the reduction in wage growth is an encouraging sign in the battle against inflation.
“We are returning to a labor market that is very much in line with hiring patterns prior to the pandemic,” Nela Richardson, chief economist of ADP, said in a press release on Thursday. “While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”
