US NFP Prep
On Wednesday the 11th of February, at 08:30 ET, the BLS releases the delayed US Employment Situation report for January.
Here are some views on what to expect.
General Expectations
Forecasts subject to change
Nonfarm Payrolls – Forecast: 69k | Prior: 50k | Range: 135k / -10k
Unemployment Rate – Forecast: 4.4% | Prior: 4.4% | Range: 4.5% / 4.3%
Average Earnings YoY – Forecast: 3.7% | Prior: 3.8% | Range: 3.8% / 3.5%
What to Expect
US Stocks
A stronger-than-expected report, solid job gains, stable unemployment, and firm wage growth, could support equities by reinforcing confidence in economic resilience and earnings growth.
A weaker-than-expected outcome may weigh on stocks, particularly cyclical and consumer-sensitive sectors, as it signals slowing demand and softer income growth.
US Dollar
A robust jobs report typically supports the dollar, as it reduces expectations for near-term Federal Reserve easing.
A soft report may pressure the dollar, with markets pricing in slower growth and a more dovish policy outlook.
US Government Bond Yields
Upside surprises in payrolls or wages could push yields higher, reflecting firmer growth and inflation expectations.
Downside surprises generally lead to lower yields, as investors anticipate slower activity and increased odds of rate cuts.
Federal Reserve Policy
A firm labour report would reduce pressure on the Fed to cut rates, supporting a patient or higher-for-longer stance.
A weak report, particularly rising unemployment or slowing wage growth, strengthens the case for a more accommodative policy path as labour-market slack builds.
Commentary
ANZ
The median expectation is that nonfarm payrolls rose 69k in January, the unemployment rate held steady at 4.4%, and average hourly earnings increased 3.7% y/y. Such an outcome would fit with the Federal Reserve’s current narrative that the labour market is showing signs of stabilisation and that risks to the employment mandate are more balanced than a few months ago.
Market pricing for a March 25bp cut firmed slightly last week to around a 20% probability, up from below 10% the prior week. However, the weak December JOLTS report and soft January ADP private sector hiring (22k) suggested the labour market is not showing signs of stabilising or recovery.
Wells Fargo
The January jobs report is expected to leave the tepid picture of the labor market little changed. Payroll growth is estimated to pick up to around 80K, with some firming in labor demand since the summer as job postings moderate more slowly and small business hiring plans rebound. That said, the January pickup likely overstates improvement because of fewer layoffs in seasonally-sensitive industries after retailers and delivery firms hired fewer holiday workers last year.
The unemployment rate is expected to hold steady at 4.4%, though there are upside risks given potential mean reversion in the household survey. More broadly, signs of gradual loosening continue, with the Conference Board labor differential and the ratio of job openings per unemployed worker falling to fresh cycle lows. Average hourly earnings are forecast to rise 0.3%, pulling the year-over-year pace down to 3.6%, keeping earnings ahead of inflation but not so strong as to block progress back toward 2% inflation given stronger productivity.
A key feature of this report will be benchmark revisions to establishment survey payrolls. The final revision is expected to be smaller than the preliminary 911K decline, but overall revisions may show 2025 payroll growth averaging closer to 20K–30K rather than the currently reported 49K, with most of the downgrade concentrated in Q1. Household survey data, including the unemployment rate, will not be revised, and population control updates are delayed until the February report. Finally, a government shutdown could delay the release, but the disruption would likely be one of timing rather than missing or less accurate data.
Credit Agricole
Our base case for the January jobs report looks for some stabilisation, with nonfarm payrolls rising by around 90k and the unemployment rate holding steady at 4.4%. That said, we acknowledge that the data heading into the release has largely been weaker than expected, which poses downside risks to this forecast.
If those downside risks were to materialise, it would also challenge our hawkish Fed view, which in part relies on the labour market showing signs of stabilisation going forward.
Previous Release
The December US jobs report painted a mixed but broadly cooling picture. Nonfarm payrolls rose 50k, below expectations of 70k, while the unemployment rate fell to 4.4% versus a 4.5% forecast. Job gains remained concentrated in food services, health care, and social assistance, while retail trade shed jobs. Hiring momentum continues to slow, with 2025 payroll growth running well below 2024 levels and prior months revised lower. Wage growth held at 3.8% y/y, but the average workweek edged down, pointing to softer labour demand.
Looking beyond the headlines, the report showed rising slack beneath the surface. Long-term unemployment has increased over the year, part-time employment for economic reasons remains elevated, and participation was unchanged. Firms appear to be adjusting through reduced hours and slower hiring rather than outright layoffs, leaving the labour market intact but clearly less tight than earlier in the cycle.
Markets focused on this underlying cooling rather than the lower unemployment rate. Equities strengthened and the dollar weakened, even as traders modestly increased pricing for a pause in rate cuts following the drop in the jobless rate. The payroll miss, downward revisions, and softer hours reinforced the view that labour momentum is fading without breaking, supporting the soft-landing narrative. That combination limits upside pressure on rates and favours risk assets over the dollar despite the superficially firmer unemployment print.
