US NFP Prep

On Friday, the 6th of February at 08:30 ET, the BLS releases the latest US Employment Situation report for January.
Here are some views on what to expect.

Overview
Forecasts subject to change
Nonfarm Payrolls – Forecast: 65k | Prior: 50k | Range: 130k / -10k
Unemployment Rate – Forecast: 4.4% | Prior: 4.4% | Range: 4.5% / 4.3%
Average Earnings YoY – Forecast: 3.6% | Prior: 3.8% | Range: 3.8% / 3.5%

General Expectations
US Stocks
If January Nonfarm payrolls come in stronger than expected, equities, especially consumer-oriented and cyclical sectors, could rally as firmer job creation supports income and spending. Conversely, a weaker-than-expected print may weigh on stock markets as markets interpret slower hiring as a sign of slowing growth.
US Dollar
A stronger-than-expected jobs gain would likely support the US dollar by reinforcing expectations of resilient economic activity, which can underpin demand for dollar-denominated assets. A weaker payroll number could pressure the dollar as it would suggest softening labor market momentum and potentially slower growth.
US Government Bond Yields
If Nonfarm payrolls exceed forecasts, Treasury yields may rise (prices fall) as markets price in stronger growth and potentially reduce expectations for near-term rate cuts. If the report undershoots expectations, yields could fall as bond markets shift toward safe-haven demand amid signs of soft economic conditions.
Federal Reserve Policy
Current Market Sentiment: Markets are currently pricing the Federal Reserve to hold interest rates steady in the near term, with limited bets on further tightening and some expectations of rate cuts later in 2026 if data continue to soften.
A stronger-than-expected jobs report, particularly one that shows broad gains across industries, would challenge the softer labour market narrative priced into markets and reduce pressure on the Fed to enact rate cuts soon, reinforcing a higher-for-longer stance on policy. A weaker result would bolster expectations for monetary accommodation and strengthen the case for rate cuts later in the year if broader economic weakness persists.

Commentary
We estimate payrolls rose 80K in January, up from the 50K gain in December. The rebound is likely to be flattered by fewer layoffs in seasonally sensitive industries after retailers and delivery firms hired fewer holiday workers last year. We forecast the unemployment rate held steady at 4.4% in January, but see some upside risks. Signs of fading job availability continue to pile up, with the Conference Board’s labor differential and the ratio of job openings per unemployed worker falling to cycle lows recently.

Sluggish labor demand is poised to keep wage growth on its moderating trend. We anticipate that average hourly earnings increased 0.3% in January, which would pull the year‑over‑year pace down to 3.6%. The 2025 benchmark revision is also slated to reveal that last year’s hiring is overstated, with average monthly payroll growth likely 20K-30K rather than the currently reported 49K. The sharp stepdown will underscore the labor market’s weakened support for household income and consumer spending growth.

Credit Agricole
The preliminary forecast looks for nonfarm payrolls to rise by +90k, accelerating from +50k last month and marking the strongest pace since September if realized. While some of the incoming labor data has been mixed, the above-consensus call is driven partly by seasonality. January typically sees sharp non-seasonally adjusted job losses, but given the current low-firing environment, seasonal layoffs may be smaller than usual, providing a boost to seasonally adjusted payrolls.

With payroll growth improving, the unemployment rate is expected to hold at 4.4%, remaining below the 4.5% peak seen in November. Average hourly earnings are forecast to rise 0.3% MoM, nudging the year-over-year pace down to 3.7% from 3.8%, but still firmly in the high-3% range that prevailed through 2025.

For policy, further signs of labor-market stabilization would reinforce the pause that began in January, which a report in line with these expectations would support. That said, the hawkish outlook relies on continued stabilization, meaning any downside surprise would raise the risk of a shorter pause and a lower terminal rate than currently projected.

CACIB
The January payroll report will be the first read on 2026 data. The headline is expected to look acceptable, but the details are likely weaker. Job growth is forecast at 50k, driven entirely by health care, with a high risk that the recent pattern of negative revisions continues. The BLS will also incorporate population revisions to the household survey, which are expected to lower the population estimate.

The unemployment rate is expected to be unchanged at 4.4%, but both the participation rate and the employment-to-population ratio are seen ticking lower.

Previous Release
The December Employment Situation painted a mixed but broadly market-friendly picture. Nonfarm payrolls rose by 50k, undershooting expectations and confirming a continued cooling in hiring momentum, particularly after prior payrolls were revised lower.
However, this softness in job growth was offset by an improvement in the labour market slack, with the unemployment rate falling to 4.4%, slightly better than forecast and revised lower for the prior month.
At the same time, average earnings surprised to the upside at 3.8% YoY, signalling that wage pressures remain sticky despite slower hiring. 
Markets focused more on the slowdown in employment growth than the firmer wage print, interpreting the data as supportive of a gradual Fed easing path. As a result, equities strengthened, while the US dollar and Treasury yields moved lower on softer growth and rate expectations.