At 1:30 PM, the U.S. labor market report will be released; significant downward revisions for 2024 are expected 📌
-
Employment Change: The market consensus is +173K; Bloomberg's consensus predicts a higher increase to +215K (compared to +256K in December).
-
Revisions for 2024: Employment figures for 2024 are likely to be revised downward by over 900K jobs.
-
Labor Force Growth: Adjusted upward by nearly 2 million due to population updates.
-
Unemployment Rate: Expected at 4.16% (compared to 4.09% previously).
Employment Report Overview
The January employment report is expected to show continued strength in the labor market. Significant data revisions from the previous year may become the main focus. The Bureau of Labor Statistics (BLS) is anticipated to lower the employment estimates (NFP) for 2024 by over 900K jobs. Simultaneously, updates to the U.S. population estimates could raise the labor force estimates by nearly 2 million—the latest BLS population estimates increased the population count by about 3.6 million compared to the previous year.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appSource: XTB Research
The market consensus for employment change currently stands at +173K. However, considering the positive surprise from Wednesday's ADP report (+183K vs. expectations of 150K), a similar trend might be expected for the NFP report. Bloomberg's consensus also supports this direction, predicting a significantly higher change at +215K.
Impact on Unemployment and Wages
With a larger labor force, the unemployment rate is expected to rise slightly to 4.16% (from 4.09%). Labor force participation may increase to 62.6% from 62.5%.
Source: XTB Research
Wage growth, a key component of inflation, is likely to remain moderately high. The market consensus expects a decline to 3.8% year-over-year from 3.9% in December. With more workers available, companies may face less pressure to increase wages, which could positively impact lower inflation dynamics. If wage growth slows, it would further support the Federal Reserve's case for interest rate cuts. Conversely, if wages remain stable or accelerate, it could undermine the current disinflation narrative and delay monetary policy easing.
Source: XTB Research
Market Implications
- Stock Market Reaction: The report may be viewed positively by the Fed, supporting expectations for interest rate cuts later in 2025. This reaction assumes solid employment levels alongside downward revisions for 2024 and reduced wage-driven inflationary pressure.
- Bond Market: Treasury yields may maintain a downward trend, provided the report supports reduced inflationary pressures and dovish outlooks from the Fed.
- Dollar Index: A weaker-than-expected employment report may put pressure on the USD, favoring riskier assets.
Before the data release, the market is showing slightly reduced appetite for riskier assets and a slight increase in the dollar's value. At the time of publication, EURUSD is down by 0.08%.
Source: XTB Research
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
