January non-farm employment report is coming tonight. Market expectations show a moderate growth trend.

The highly anticipated jobs report to be released by the U.S. Labor Department on Friday will be impacted by annual benchmark revisions, new population weights, and updated seasonal adjustment factors. Job growth in January in the U.S. may slow down, partially due to the suppression caused by California wildfires and cold weather in most parts of the country, but this is still not enough for the Federal Reserve to resume interest rate cuts before the end of the first half of the year. Nevertheless, economists expect a healthy labor market to remain unchanged. The unemployment rate is expected to be 4.1%, layoffs are at historical lows, and wages are steadily rising. The resilience of the labor market is the driving force behind economic expansion and provides the Federal Reserve with room to pause rate cuts. Policymakers are also assessing the impact of the Trump administration's fiscal, trade, and immigration policies, with economists believing that these policies will lead to inflation. "There will be some noise, but the overall message will be a continuation of a relatively healthy labor market," said Dan North, Senior Analyst at Euler Hermes Trading Americas. "There is no reason to disrupt this narrative." According to a Reuters survey of analysts, non-farm payrolls are expected to increase by 170,000 in January, compared to an increase of 256,000 in December. It is estimated that the wildfires in Los Angeles have already reduced up to 25,000 job positions, with most expected to come from the accommodation and food services and domestic industries. Cold temperatures and snowstorms covering large areas of the country could lead to construction sites shutting down and affect other parts of the leisure and hospitality sectors, potentially cutting another 15,000 jobs. The final jobs report from the Biden administration is expected to show slower job growth from April 2023 to March 2024 compared to previous reports. The government estimated in August that job levels over the past 12 months would decrease by 818,000 positions. However, subsequent updates to the original data lead economists to predict that the job reductions will reach between 675,000 and 700,000. Downward revisions Employment numbers from April to December may also be revised to reflect new seasonal factors and information. Benchmark revisions will also impact average hourly earnings and the workweek. Average hourly earnings are expected to increase by 0.3%, remaining stable compared to December. This will bring the wage growth rate down from 3.9% in December last year to a still steady 3.8%. Andrew Husby, Senior U.S. Economist at Natixis, said, "We expect that the annual revision will reduce the recent trend growth pace by 35,000 and average around 70,000 from April 2023 to March 2024." "This may have a greater impact on recent momentum, but given the strong economic growth, we are skeptical of this." As job growth increasingly concentrates in low-income industries such as leisure, hospitality, healthcare, and social assistance, some economists argue that the labor market disguises what they believe is a white-collar decline. They believe the Federal Reserve should consider lowering interest rates. Sung Won Sohn, Professor of Finance and Economics at Loyola Marymount University, said, "Many jobs for the middle to higher income brackets have disappeared." "Based on monthly wage data, perhaps the economy is not as robust as many imagine. I hope the Fed can consider this." Last month, the Federal Reserve kept the benchmark overnight rate unchanged at a range of 4.25%-4.50%, having cut it by 100 basis points since the start of a loose monetary policy cycle in September last year. To curb inflation, policy rates were raised by 5.25 basis points in 2022 and 2023, respectively. Financial markets expect a rate cut in June. There is growing concern that mass evictions and tariffs may reduce labor supply, leading businesses to be reluctant to increase costs by expanding their workforce, thereby hindering the labor market this year. The Trump administration's reduction of federal government job positions is also seen as dampening job growth. Government employment, including state and local governments, has been a major contributor to job growth. The January jobs report will also include new population control factors for household surveys used to calculate the unemployment rate. The new weights may increase the size of the labor force and elevate household employment numbers, narrowing the gap with non-farm employment figures. Economists believe that the household survey did not capture the surge in immigration, which is why it contravenes institutional survey results. The unemployment rate is usually not affected by population controls, but due to this series of data interruptions, the January unemployment rate will not be directly comparable to December. Stephen Stanley, Chief U.S. Economist for Amherst Pierpont Securities, said, "The underlying pace of job growth is currently around 150,000, and if there is any change, it should further slow down in early 2025, reflecting both a slowdown in demand for workers due to economic deceleration and a decline in the growth rate of labor supply, as well as tighter immigration policies." "Given the significant policy-related uncertainty that businesses are facing in the short term, companies will take a conservative approach to investment and hiring in early 2025."