Friday's jobs report could present a mixed view of the labor market. Here's what to expect
The December jobs report is likely to provide only limited clarity on where the labor market is headed, with experts differing on how pronounced a slowdown there is in hiring.
From a consensus view, economists expect the Bureau of Labor Statistics on Friday morning to report a gain of 155,000 in nonfarm payrolls, a step down from the surprising 227,000 increase in November but about in keeping with the four-month average. The unemployment rate is forecast to hold steady at 4.2%.
However, the details of the report will be key, with some on Wall Street expecting that the number could come in a bit weaker, depending on how seasonal trends and other factors play out.
"We've seen a little bit of the softening, and I think we'll continue to see that, but it's still a good [labor] market overall," said Maureen Hoersten, chief operating officer and interim CEO at LaSalle Network, a Chicago-based staffing firm. "Things are leveling off a little bit. People are still a tad cautious, trying to figure out this new year and the new economic climate and political climate."
On average, the economy in 2024 added about 180,000 jobs a month through November, though the data has been volatile and somewhat confusing lately. Federal Reserve Governor Michelle Bowman said Thursday that labor market reports "have become increasingly difficult to interpret" due to measurement challenges, which have included a surge of new workers and low response rates on surveys.
The December report also could be harder to judge depending on how the hiring of holiday workers affects the numbers.
Goldman Sachs, for one, estimates that payroll growth will come in at just 125,000, with the unemployment rate drifting up to 4.3%.
"Our forecast reflects a rebound in the labor force participation rate and middling household employment growth amid more challenging job-finding prospects," the Wall Street bank said in a note. "We expect deceleration in job growth in non-retail sectors, particularly professional services and construction, to more than offset stronger retail hiring this month."
Similarly, Citigroup is predicting just 120,000 new jobs and a 4.4% unemployment rate, which economist Andrew Hollenhorst wrote "should remind markets that the labor market has not stabilized and is continuing to soften. Risks are balanced to an even softer reading."
However, Hoersten said she thinks that once some of the current volatile factors subside, companies will continue adding head count, even if at a gradual rate. A Bureau of Labor Statistics report Tuesday put job openings in November at a six-month high of just over 8 million, while layoffs were little changed and the quits rate, a measure of worker mobility, declined.
At the Federal Reserve's December meeting, officials noted an "ongoing gradual easing in labor market" conditions, but saw "no signs of rapid deterioration," according to minutes released Wednesday.
In a recent business survey, LaSalle Network found that 67% of small and midsize companies plan to increase head count in 2025, down from 74% the year before. The survey also found that salary increases are expected to be smaller and hybrid working is likely to remain prevalent as a wedge to compete against larger companies for workers.
Average hourly earnings are expected to show a 0.3% increase in December and an annual rate of 4% from a year ago, little changed from November.
"Right now, I think things are just going to stay fairly flat overall, nothing drastic one way or the other," Hoersten said. "But I do believe it's still a good, strong market, and companies just needed to get past the little bit of a crazy climate over the past couple months and get back to the steady state."
The final jobs report for 2024 lands Friday. Here’s what 2025 could mean for your job
In 2024, job growth continued to cool off, settling back into a familiar gait that was roughly in line with the pace of job creation in 2010-2019.
Through November, the US economy added about 180,000 jobs per month. The unemployment rate bumped higher but stayed near historic lows.
Those headline measures helped lend some reassurance that the resilient and growing US economy is slowly heading toward that elusive “soft landing” of reining in inflation without cratering into a recession.
How that likely shaped up through December should become a lot clearer on Friday when the Bureau of Labor Statistics releases the final jobs report for 2024 at 8:30 a.m. ET.
Economists expect that job growth last month was solid — but relatively tame — at 153,000 and that the unemployment rate didn’t budge from 4.2%, according to FactSet consensus estimates.
“2024 captured a very stable labor market, a labor market where supply and demand were in balance for the first time, post-pandemic,” Nela Richardson, chief economist at payroll company ADP, said Wednesday.
While steady, sturdy and solid were ongoing themes in the jobs market through this past year, 2025 has the potential to be anything but.
“I don’t think we’ll stay stable,” she said. “Economies are known to change very quickly.”
In recent months, the typical churn that’s seen in healthy labor markets started getting more gummed up: Hiring activity dropped off to a decade low, more and more workers were staying put and jobs searches were taking a lot longer.
“This is still a pretty healthy labor market; it’s also pretty bifurcated,” said Cory Stahle, economist at Indeed Hiring Lab. “Your experience with the labor market is going to depend largely on what industry or occupation you’re working in.”
The slowdown and hesitation have been attributed to myriad factors, including post-pandemic normalization, job growth driven by a few industries, high interest rates, technological advancement and just plain uncertainty about the direction of the economy, global events and President-elect Donald Trump’s potential policies.
Some of those biggest question marks could be answered in the coming months — especially to the extent of trade, immigration, tax and fiscal policies that could bolster some industries or drastically hamstring others.
“The labor market doesn’t happen in a vacuum,” said Elise Gould, senior economist at the Economic Policy Institute. “Right now, things are pretty strong (by measures such as wage growth, high employment-to-population ratio and low unemployment), but I see no reason why those would change unless there are huge policy changes.”
“And it looks like the incoming administration is going to make some changes to policy, which could cause some weakness in the economy,” she added.
Gould is not alone among economists and others who have sounded the alarm bells as to how pledges such as stiff tariffs, mass deportations and plans to “cut the government down to size” could cause inflation to reaccelerate and raise the cost of living; exacerbate job shortages in industries such as agriculture, health care, food service, child care and construction; and hamper agencies that provide services to the general public.
Some of the industries facing headwinds have been driving much of the job gains during the past year.
From January through November, private health care and social assistance accounted for 75% of overall job gains: 41% in health care, 21% in government and 13% in leisure and hospitality, a review of Bureau of Labor Statistics data shows.
“Already somewhat concerning, this [tri-industry] concentration could become even more worrisome in 2025 if these industries run out of steam — and there are indications that they are,” Stahle and Indeed Hiring Lab economists wrote in a recently released 2025 outlook.
Job gains have been slowing as these industries have caught up to pre-pandemic levels, and they very well could soften further if Trump follows through on those campaign promises, they wrote in the outlook.
There is plenty of optimism about the labor market picking up even further this year, said Julia Pollak, chief economist at ZipRecruiter.
“Perhaps the increase in [job] openings in November is the first signal about hiring improving in ’25,” she said, referencing the Job Openings and Labor Turnover Survey report that showed an increase in available jobs.
The No. 1 reason to be bullish this year is that the Federal Reserve started cutting interest rates in 2024, she said.
Monetary policy acts on a lag, so the three cuts to date are still working their way through the economy. And, more cuts could be coming down the pike.
“The share of banks prepared to lend to consumers keeps going up, various retail outlook surveys show an improvement among retailers, and indicators like total vehicles sales suggest that lower borrowing costs are improving affordability meaningfully enough now to increase sales and activity,” she said.
The ripple effect in the labor market may lag a little, Pollak said, noting that companies want to make sure sales growth is durable before they add more employees.
“But the longer those improvements are seen, the more and more likely a labor market rebound can happen,” she said.
Also, hiring activity is picking up in the financial sector, she said, noting the markets’ recent surge as well as anticipation of looser regulations around deal-making.
And it’s also very possible that the “government” sector could continue to see job growth, despite being put in the crosshairs by the incoming administration, she said.
Most of those gains have been concentrated at the local and state level, which accounted for a 12.3% and 6.6% share of overall job gains, BLS data shows. Federal jobs accounted for just 2%.
“A huge fraction of it is in place like Texas, Florida and Nevada — most government hiring reflects population,” she said. “You have more public school teachers when you have kids in the district; you have more police when you have more businesses and tax revenue and people moving.”
“I don’t see that being targeted by government efficiency departments. That will continue and it will just reflect the fact that people are moving and demanding services, schools and policing,” Pollak said.
The economic data teeing up Friday’s jobs report showed cooler, but still stable, labor market activity.
A closely watched report on private sector hiring indicated that job growth “downshifted” in December as employers added an estimated 122,000 jobs, according to payroll processor ADP. That marked a retreat from the net gain of 146,000 private sector jobs ADP reported for November.
Pay gains for people who stayed at their jobs slowed to 4.6%, the slowest pace since July 2021, according to the ADP report.
Although job gains have slowed considerably from the massive employment growth seen during the pandemic recovery, the overall labor market isn’t faltering, ADP’s Nela Richardson said during a press call Wednesday morning.
Part of that stability can be attributed to low levels of layoffs as well as people voluntarily quitting their jobs, she said. The latest labor turnover data, released Tuesday, showed quit levels were the lowest they’ve been since the height of the pandemic.
Still, the report also showed that layoff activity remained low.
New data released Thursday showed that fewer job cut announcements were made in December than the month before; however, that activity remains elevated from last year. US-based employers announced 38,792 expected job cuts in December, a 33% decrease from November, according to a new report from outplacement and coaching firm Challenger, Gray & Christmas.
Those announcements, however, were up 11% from December 2023, according to the report. By Challenger’s count, there were 761,358 job cuts announced throughout 2024, which was the highest since the pandemic in 2020 and, before then, 2009.
“Companies underwent extraordinary change in 2024 due to rapid technological advancement and shifting economic conditions,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement. “Most employers are anticipating additional uncertainty with the upcoming administration, which is leading to slower hiring and more layoffs in the short term from various sectors.”
Initial jobless claims, a proxy for layoffs, dropped last week to 201,000, marking the lowest total since February 2024, according to Labor Department data released Wednesday.
Jobless claims data can be volatile — especially during holidays — and is frequently revised.
Continuing claims, which are filed by people who have received unemployment benefits for at least a week, rose 33,000 to 1.867 million, staying near a three-year high and indicating it’s taking longer for unemployed people to find work.
November’s jobs report — which was headlined by strong, bounce-back gains of 227,000 jobs after a heavily distorted October report — also showed that people were staying unemployed on average for 23.7 weeks (more than five months), the highest duration since April 2022.
One of the strongest labor markets in US history just ended 2024 with a bang
The US economy closed out 2024 with another month of massive job growth, adding 256,000 positions in December.
The unemployment rate dipped to 4.1% from 4.2%, wrapping up a year that marked a return to pre-pandemic norms, according to Bureau of Labor Statistics data released Friday.
While the final jobs report for 2024 underscores how the US labor market has turned the corner since the pandemic, there’s plenty of uncertainty as to what 2025 could bring for the trajectory of the labor market — in part because of President-elect Donald Trump’s potential policy changes involving trade, immigration, taxes and the federal workforce.
Including December’s gains, which are subject to revision, the economy added about 2.2 million jobs in 2024, an average of 186,000 jobs per month. That’s in line with annual totals from 2017 to 2019 but marks a slowdown from the blowout gains seen during the pandemic recovery during the prior years.
The US has now added jobs for 48 months in a row, tying the second-longest period of employment expansion on record.
Economists were expecting a net gain of 153,000 jobs and for the unemployment rate to stay at 4.2%, according to FactSet.
US stock futures dropped sharply after the better-than-expected report, with futures on the Dow falling by almost 400 points before settling slightly higher. The 10-year Treasury yield surged to 4.8% as traders fear the robust data and a stronger economy could lead the Federal Reserve to pause its rate-cutting campaign.
The labor market has shown resilience and stability after recovering from a once-in-a-generation pandemic and navigating the dual pressures of fast-rising prices and high interest rates. The unemployment rate has remained low, employment participation has increased (especially among women and prime-aged workers), productivity has increased and wage gains have outpaced inflation for 19 months.
The solid labor market has helped fuel consumer spending, which in turn has kept the overall economy strong as inflation has eased — perhaps setting the stage for the rare achievement of a “soft landing” of price stabilization without a recession.
Still, the jobs market isn’t impenetrable. Job growth is slowing, hiring has dropped off, and people are staying unemployed for longer, fueling concerns that a greater weakening could be afoot.
The Fed, with an eye on ensuring maximum employment in addition to cooler inflation, has cut interest rates by a full point in recent months. The pace of cuts, however, is expected to moderate in 2025, the Fed has indicated, noting potential risks to inflation as well as underlying strength in the labor market.
This story is developing and will be updated.
December Jobs Report: Labor Market Grew Faster Than Expected As Unemployment Clocks In At 4.1%
Job growth was stronger than economists anticipated last month, according to the Labor Department’s monthly nonfarm payrolls report released Friday morning, a key datapoint as investors and policymakers reassess the state of the economy ahead of the shift in power in the nation’s capital.
Friday’s nonfarm payrolls is the “first big report of the year” for the U.S. economy, according to Sevens Report founder Tom Essaye, noting the jobs update is “even more important than it would normally be” given the fork in the road for U.S. monetary policy. That’s because the sharp interest rate cuts long yearned for by borrowers and equity investors may be drying up – the Federal Reserve recently indicated it expects far fewer rate cuts in 2025 than previously forecasted – due to a combination of economic factors. Those include a relatively stable labor market, making the need for stimulatory cuts less pressing, and concerns about sticky inflation partially traced back to President-Elect Donald Trump’s proposed tariffs and broader economic gameplan. Conventional economics wisdom says higher interest rates lead to higher unemployment and lower inflation. “The cutting cycle might already be over” if the labor market proves resilient in coming months, cautioned Bank of America strategist Gonzalo Asis in a Monday note to clients.
Though 2024 was a solid year for job growth – nonfarm payrolls grew by more than 1% from 157.3 million to more than 159 million from Dec. 2023 to Dec. 2024 – U.S. companies announced the second-most job cuts since 2009 last year, trailing only 2020, according to Challenger, Gray & Christmas. High-profile corporations like BlackRock and Microsoft indicated this month they’ll perform small rounds of layoffs.
This is the last jobs report before President-elect Donald Trump succeeds Joe Biden. The Biden labor market saw unemployment fall about 2.5 percentage points from Dec. 2020’s 6.7% and total employment grow by 12%, though those numbers are likely skewed positively as the U.S. recovered from the unprecedented effects of COVID-19’s sudden job losses.
U.S. payrolls grew by 256,000 in December, much more than expected; unemployment rate falls to 4.1%
Job growth was much stronger than expected in December, possibly providing the Federal Reserve less incentive to cut interest rates this year.
Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast from the Dow Jones consensus, the Bureau of Labor Statistics reported Friday.
The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. An alternative measure that includes discouraged workers and those holding part-time positions for economic reasons moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
Stock market futures were negative after the report's release while Treasury yields soared.
The report brings to a close a year in which employment grew each month, though inconsistently and at times raising questions over whether a recession loomed. However, the final two months showed a labor market still operating at strength as the Fed contemplates its next moves on monetary policy.
One area that Fed officials have stressed to not be a source of inflation is the labor market, and wages grew slightly less than expected.
Average hourly earnings increased 0.3% on the month, which was in line with forecasts, but the 12-month gain of 3.9% was slightly below the outlook and indicative that wage inflation at least is becoming less of a factor. The average work week again held steady at 34.3 hours.
Job growth came from the familiar sources of health care (up 46,000), leisure and hospitality (43,000) and government (33,000).
Retail also saw a sizeable gain, up 43,000 after losing 29,000 in November heading into the holiday shopping season. The sector saw payroll growth of 2.2 million for the full year, down nearly one-third from the 3 million gain in 2023.
Revisions for prior months were less substantial than has been the recent trend. The October count saw an upward change of 7,000 to 43,000, while the November number was cut by 15,000 from the prior estimate.
This is breaking news. Please check back for updates.
Employers added 256,000 jobs in December, blowing past forecasts
Employers added 256,000 jobs in December, blowing past economists' expectations and signaling that the job market remains resilient in the face of still-high borrowing rates and stickier-than-expected inflation.
The economy was expected to add 153,000 jobs last month, according to economists polled by financial-data firm FactSet. The unemployment rate in December stepped down to 4.1%, lower than the forecast that the rate would remain steady at 4.2%.
The Jan. 10 jobs report marks the last monthly employment snapshot of the Biden administration, which inherited an economy scarred by the pandemic. When Biden was inaugurated in January 2021, the jobless rate stood at 6.4%, while inflation was about to soar to 40-year highs, kicking off a flurry of interest rate hikes from the Federal Reserve to tame price increases.
Under the Fed's restrictive monetary policy, the economy has cooled, dampening inflation but also creating some cracks in the labor market. At the same time, the incoming Trump administration's policies, if enacted, are expected to be inflationary, prompting some economists to predict that the central bank may hold off on cutting rates at its January 29 meeting.
The robust jobs report may also ease pressure on the Fed to continue to cut rates, given the Fed Chair Jerome Powell had cited some earlier signs of weakness in the labor market as one reason why the central bank began cutting rates in September.
"December's jobs report delivers a strong finish to 2024 and is a promising sign of what's to come in the new year," said Ger Doyle, U.S. country manager at recruiting firm ManpowerGroup, in an email. "However, the labor market may still face challenges until inflation is under more control, which is necessary to prevent slower hiring, layoffs and reduced job growth."
Hiring was strongest in the health care, government and social assistance industries, the Bureau of Labor Statistics said Friday. Retail companies also added jobs last month, after a decline in November.
US job growth beats expectations in December; unemployment rate falls to 4.1%
WASHINGTON, Jan 10 (Reuters) - U.S. job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1% as the labor market ended the year on a solid footing, reinforcing the Federal Reserve's cautious approach to interest rate cuts this year.
Nonfarm payrolls increased by 256,000 jobs last month after rising by a downwardly revised 212,000 in November, the Labor Department said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls advancing by 160,000 jobs following a previously reported 227,000 surge in November. Estimates for December's job count ranged from 120,000 to 200,000 positions added.
Hiring has slowed in the aftermath of the U.S. central bank's hefty rate hikes in 2022 and 2023. Nonetheless, labor market resilience, mostly reflecting historically low layoffs, is powering the economy by supporting consumer spending via higher wages.
The economy is expanding at well above the 1.8% pace that Fed officials regard as the non-inflationary growth rate. Fears are, however, mounting that pledges by President-elect Donald Trump to impose or massively raise tariffs on imports and deport millions of undocumented immigrants could derail momentum.
Those worries were evident in minutes of the Fed's Dec. 17-18 policy meeting published on Wednesday, which noted "most participants remarked that ... the Committee could take a careful approach in considering" further cuts.
Average hourly earnings increased 0.3% last month after gaining 0.4% in November. In the 12 months through December, wages advanced 3.9% after rising 4.0% in November.
While business sentiment perked up following Trump's Nov. 5 election victory on hopes of tax cuts and a less-stringent regulatory environment, economists do not expect a surge in hiring in the near term.
There have also been no signs in business surveys that companies are planning to boost head counts.
The fall in the unemployment rate was from 4.2% in November.
The government revised the seasonally adjusted household survey data, from which the unemployment rate is derived, for the last five years.
Loosening labor market conditions have been underscored by steady rises in the number of people who have permanently lost their jobs, as well as the median duration of unemployment since September to a near three-year high of 10.5 weeks in November.
That is consistent with the Job Openings and Labor Turnover Survey, showing the hires rate falling back to levels seen early in the COVID-19 pandemic.
The Fed last month cut its benchmark overnight interest rate
by another quarter-point to the 4.25%-4.50% range, bringing the total of reductions since it kicked off its easing cycle in September to 100 basis points.
But it projected only two quarter-point rate cuts this year compared to the four it had forecast in September, acknowledging the economy's endurance and still-elevated inflation. The policy rate was hiked by 5.25 percentage points in 2022 and 2023.
US weekly jobless claims at 11-month low amid labor market stability
WASHINGTON, Jan 8 (Reuters) - The number of Americans filing new applications for unemployment benefits fell to an 11-month low last week, pointing to a stable labor market, though a slowdown in hiring has led some laid-off workers to experience long bouts of joblessness.
Signs of a steadily cooling labor market could allow the Federal Reserve to keep interest rates unchanged in January against the backdrop of still high inflation.
The U.S. central bank last month projected a shallower path of rate cuts this year than had been forecast in September, when it launched its policy easing cycle.
Fed Governor Christopher Waller said on Wednesday that he expected further rate cuts, adding that the pace of the reductions "will depend on how much progress we make on inflation, while keeping the labor market from weakening."
"The Fed says rate cuts from here on out will be gradual," said Carl Weinberg, chief economist at High Frequency Economics. "Today's claims data say that they need not be in a rush to ease monetary conditions. Fed policy is aimed at supporting the economy and the job market before a recession shapes up."
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 201,000 for the week ended Jan. 4, the lowest level since February 2024, the Labor Department said on Wednesday. Economists polled by Reuters had forecast 218,000 claims for the latest week.
The report was published a day early as federal government offices are closed on Thursday in honor of former President Jimmy Carter who died on Dec. 29 at the age of 100.
Though claims tend to be volatile at the turn of the year, they have bounced around levels associated with low layoffs that are underpinning the labor market and broader economy. The four-week average of claims, which strips out seasonal fluctuations from the data, dropped 10,250 to 213,000 last week.
"The low level of claims is consistent with a labor market that continues to be characterized by a low pace of layoffs," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "The initial claims data will be subject to seasonal noise for at least a few more weeks, but we don't expect claims to fall much below current levels.
Minutes of the Fed's Dec. 17-18 meeting published on Wednesday showed policymakers viewed labor market conditions as "gradually easing," and saw "no signs of rapid deterioration."
They, however, noted "that labor market indicators merited close monitoring."
Labor market stability was underscored by government data on Tuesday showing an increase in job openings in November, with 1.13 vacancies for every unemployed person, up from 1.12 in October. Uncertainty over the impact of proposed policies from President-elect Donald Trump's incoming administration is also seen causing the Fed to pause rate cuts this month.
Trump has pledged to cut taxes, impose or massively raise tariffs on imports and deport millions of undocumented immigrants, plans which economists warned would stoke inflation.
Those concerns are weighing on investor sentiment.
U.S. Treasury prices fell, with the yield on the 10-year note rising to the highest level since April. Stocks on Wall Street declined in response, while the dollar gained versus a basket of currencies.
The central bank lowered its benchmark overnight interest rate by 25 basis points to the 4.25%-4.50% range last month.
The Fed, however, projected only two rate cuts this year compared to the four it had forecast in September. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.
While layoffs have remained low by historical standards, hiring has slowed, with the ADP National Employment on Wednesday showing private payrolls increased by 122,000 jobs in December after rising 146,000 in November. Economists had forecast private employment rising by 140,000.
Sluggish hiring means some out-of-work people are facing long spells of unemployment. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 33,000 to a seasonally adjusted 1.867 million during the week ending Dec. 28, the claims report showed.
Part of the elevation in the so-called continuing claims has been attributed to difficulties stripping out seasonal fluctuations. With the median duration of unemployment nearing a three-year high in November, economists will be hoping for an improvement when the government publishes its closely watched employment report for December on Friday.
Nonfarm payrolls likely increased by 160,000 in December, a Reuters survey showed, as the boost from the end of disruptions from hurricanes and strikes by factory workers at Boeing (BA.N) , opens new tab and another aerospace company faded.
The economy added 227,000 jobs in November. The unemployment rate is forecast to be unchanged at 4.2%.
"A low hiring environment continues to pose upside risk to continuing claims," said Gisela Hoxha, an economist at Citigroup.
There's an important jobs report coming Friday. Here's what to expect
After a month in which hiring was essentially muted due to storms and strikes, the jobs report due out Friday could provide a clearer picture of where the labor market is headed.
The Bureau of Labor Statistics is expected to report Friday at 8:30 a.m. ET that nonfarm payrolls increased by 214,000 in November, a significant step up from the meager 12,000 gain in October. That month's reading was the worst for job gains since December 2020.
One of the things that will make the report so pivotal is it will be the last comprehensive look the Federal Reserve will get before its next policy meeting on Dec. 17-18. Markets are betting heavily that the Fed will approve another quarter-percentage-point interest rate cut, but that could change depending on how the jobs count plays out.
"Well, it should be a pretty healthy number, because it should bounce back from [October] when we had [Hurricane] Milton and the [Boeing strike] holding down jobs," said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research.
In fact, the October number could get pushed higher after BLS surveyors go back and recheck the month's data. Revisions to the payrolls reports sometimes have been massive in the post-Covid period.
That could add to a messy couple of months with economic data and make the Fed's job more challenging.
"I would expect it to be over 200,000, and the risk would probably be to the upside if we get a real rebound," Jones said. "But I'm not sure that this jobs report will tell us much, either, because of all the weather effects up and down. Is it really going to give us a clear view of the future, or is it just going to be more muddy data to deal with?"
Getting a clear picture for the Fed is essential now as policymakers look to recalibrate policy at a time when annual inflation rates are elevated but easing, and focus has increased on the labor market.
Aside from the October report, the jobs picture has been showing a mostly slower trend since around April, with payroll gains averaging about 128,000 new jobs a month as the unemployment rate has drifted up to 4.1%. Fed policymakers want to take their benchmark short-term borrowing rate down to a more neutral level as they balance their focus between inflation and employment.
"This is absolutely going to be noisy, because a storm and strike disruption affects two months' worth of data, the data for the month in which people aren't working and the next month when they return to work," said BNY economist Vincent Reinhart, a former Fed official who served 24 years at the central bank.
"The way the Fed sees it is that the slowing in nonfarm payrolls over the course of 2024 was basically settling to trend — trend being something a little above 100,000 jobs created a month — and that was not worrisome," he added. "It was actually welcome, because, you know, trend is sustainable."
Indeed, the most recent signals point to a job market leveling off but not worsening.
Initial weekly unemployment insurance claims have held in a fairly steady range around 220,000, though continuing claims earlier in November had hit their highest level in about three years. Together, the numbers indicate that companies are not laying off workers en masse but also aren't rehiring those who do lose their jobs.
A Fed economic report Wednesday — its "Beige Book" summary of current conditions — described hiring as "subdued as worker turnover remained low and few firms reported increasing their headcount." The report said layoffs are "low" but employers indicated caution about the future pace of hiring, with more enthusiasm about entry-level workers and skilled trades.
Job openings increased in October while the hiring rate fell and those leaving their jobs voluntarily increased, according to BLS data this week.
The Fed will have to weigh all of those factors, plus worries about rising inflation, when it makes its rate decision and lays out its outlook for the future.
If the labor market can remain steady, then it shouldn't put additional pressure on inflation, Reinhart said. "So the strategy is, try to get demand at trend, because if growth and demand are at trend, then you should preserve the current state of the labor market, and the labor market is roughly in balance," he added.
In addition to the headline payrolls gain, the unemployment rate is expected to nudge up to 4.2% as the labor force sees re-entrants from October. Also, average hourly earnings are expected to rise 0.3% on the month and 3.9% from a year ago, both down slightly from the previous month.
