NFP Preview: Forecasts from nine major banks, employment to soften due to Omicron

The US Bureau of Labor Statistics (BLS) will release the January jobs report on Friday, February 4 at 13:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of nine major banks regarding the upcoming employment data. 

The US economy is expected to have added 150K jobs in January, down from 199K reported in the previous month. The unemployment rate is foreseen to hold steady at 3.9% and Average Hourly Wages are anticipated to rise 0.5% MoM, 5.2% YoY during the reported month.

Danske Bank

“We expect the jobs report will show jobs growth around the current level of 200K. Employment growth is unlikely to pick up pace until more people return back to the labour force.”

RBC Economics

“US payroll employment in January is expected to rise another 150K and the unemployment rate to edge down to 3.8%. The spread of the Omicron variant is not expected to have a significant impact on employment, but could lower hours worked with rapid spread meaning large numbers of workers were likely off sick.”

ING

“The January jobs report is likely to be weak, with a payrolls gain of just 100K expected. The risks are likely to be to the downside given the sharp drop-off in activity and higher-than-expected jobless claims since the Omicron wave hit. Admittedly there are more than 10 million job vacancies right now, but consumer and business caution has been heightened by the latest pandemic developments and hiring is set to have slowed. Nonetheless, we remain hopeful that with covid case numbers now falling in many states, we will start to see consumers re-engage with the economy. That should pave the way for much stronger activity and job readings in February and March.”

SocGen

“We expect a modest NFP gain of 155K. The unemployment rate, which has been falling quickly in recent months, should stabilize in January at 3.9%. We expect the Omicron issue to be a short-term, temporary event, but the January evidence should capture this downside.” 

NBF

“Payrolls could have dropped 250K in the month. The household survey is expected to show a similar decline, a development which could still leave the unemployment rate unchanged at 3.9%, assuming the participation rate fell two ticks to 61.7%.”

CIBC

“With activity in service sectors infected by Omicron in January, causing jobless claims to rise, hiring likely slowed to a 102K pace. Most of the impact from Omicron will be on display in a reduction in hours worked in sectors that experienced tighter restrictions and consumer caution, along with worker absenteeism related to infections. As a result, the unemployment rate likely ticked up to 4.0%, while wage growth could have remained hot at 0.5% as job gains were tilted towards higher-paying sectors. We’re below the consensus, which could weigh on the greenback and bond yields.” 

Deutsche Bank

“We are expecting NFP to have grown by a relatively subdued +150K in January (in line with consensus), with the unemployment rate remaining at a post-pandemic low of 3.9%. Clearly, Omicron will impact this data, so it'll be tough to get a clear read through but Fed Chair Powell has already said that his personal view is that labour market conditions were consistent with maximum employment, “in the sense of the highest level of employment that is consistent with price stability’.”

TDS

“Payrolls likely plunged in January, but only because of temporary Omicron fallout; if anything, we see downside risk to our -200K estimate. Several Fed officials have already made clear that they will discount weak data as temporary. Also, we see upside risk on average hourly earnings, with an already strong trend likely to be added to by temporary Omicron effects relating to the composition of payrolls and the length of the workweek. Our 0.6% MoM estimate for hourly earnings implies 5.3% YoY, up from 4.7% YoY in December.”

Citibank

“We expect a soft 70K increase in January Nonfarm Payrolls, although with substantial two sided risks due to the greater than usual uncertainty surrounding worker shortages related to the spread of the Omicron variant. That said, we expect a clearer continued downward trend in the unemployment rate to emerge in coming months.”