NFP: Hiring to remain a still strong 205K – Wells Fargo

The January official employment report will be released on January 6. According to analysts at Wells Fargo, payrolls will slowdown from the previous months but still hold above the 200K level in December.  

Key Quotes: 

“The November employment report was not encouraging for Federal Reserve policymakers who are striving to bring the labor market into better balance. Nonfarm payrolls again blew past expectations, increasing by 263K in November. Wage growth was also much stronger than expected, and over the past three months, average hourly earnings rose at a 5.8% annualized rate, nearly double the pre-pandemic pace of wage growth. Making matters worse, new labor supply that might help put water on the fire was again not forthcoming; the labor force participation rate fell by a tenth of a percent and is now below where it was in January.”

“The next employment report will be released on January 6 but will be data for the final month of 2022. We look for hiring to downshift from the November pace but to remain a still-strong 205K. Chair Powell and company will be analyzing the report closely for signs that new labor supply is coming on line and that wage growth is moving closer to a pace that would be consistent with 2% inflation. Another strong reading for nonfarm payrolls should keep the central bank in tightening mode when it concludes its first meeting of 2023 on February 1.”