Friday’s nonfarm payrolls promises (threatens?) to be a critical update on the labor market. Basically the question is, If not now, when?

The Great Recession is technically over, but the labor market has yet to show any sympathy. Nonfarm payrolls have been retreating for more than two years—each and every month. Although net job creation is always among the last to arrive after recessions, the depth and length of the current/recent job destruction now begs for some evidence that recovery is at least possible if not robust. Even if job growth begins now, there’s some reason to wonder about its sustainability and duration. As we wrote last month, it’s going to be a long year.
But the year arrives one data point at a time. The next major update arrives on Friday, when all eyes will focus on Friday’s nonfarm payrolls report for January. What should we expect? reports that the consensus outlook calls for a small rise of 13,000 in nonfarm payrolls. If so, that would be a welcome change from December’s 80,000 loss. Meanwhile, Briefing’s in-house forecast is a negative 40,000 change in nonfarm payolls for January.
For some additional perspective, here are a few of the speculations making the rounds…
● Rick MacDonald, director of investment research and analysis, Action Economics, via
BusinessWeek, Feb. 2, 2010
Following the “sea of red” for employment reports for much of the last two years, U.S. nonfarm payrolls are set to move back into positive territory in 2010, and perhaps as early as January, with the Feb. 5 release of the month’s employment report. We should see stronger gains over the coming months, led by hiring for the U.S. Census, though economists will be tracking the private payroll figures to gauge the sustainability of job growth into the second half of the year.
For the January report, we expect an unchanged payroll figure with a 0.1% rise in the jobless rate to 10.1%. The average workweek should be unchanged at 33.2 hours, while average hourly earnings should rise 0.2%.
Reuters, Feb 1, 2010
The median forecast for nonfarm payrolls is for an increase of 5,000 after an unexpected 85,000 drop in December. Forecasts range from a decrease of 97,000 to an increase of 100,000. The unemployment rate is seen rising to 10.1 percent from 10 percent in December. Forecasts range from 9.8 percent to 10.2 percent…The weather is a wild card for January payrolls. Given a rise in job losses in weather-sensitive sectors such as construction and leisure in December, analysts believe below-normal temperatures contributed to the surprise 85,000 drop in payrolls that month.
Wall Street Journal, Feb. 3, 2010.
“Further reduced employment levels could be seen, as the consensus expects, but bear in mind that we may be around a turning point for the labor market. Still, we should not expect a rapid decline,” said Raphaelle Knight, analyst at Newedge Group., Feb. 1, 2010
The big report of the day [Friday, Feb 5] is the January jobs report from the Labor Department. Employers are expected to have added 13,000 jobs to their payrolls in the month after cutting 85,000 in the previous month. The unemployment rate, generated by a separate survey, is expected to hold steady at 10%.