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January jobs report expected to show solid start to 2020

Megan Henney

The U.S. economy likely began the new decade on a solid note, with January employment data expected to signal that the labor market is growing at a healthy pace.

Economists surveyed by Refinitiv expect the economy added 160,000 jobs in January, up from the slightly lower-than-expected 145,000 in December but slightly below last year’s average of 176,000 jobs. Unemployment is projected to hold steady at 3.5 percent, a half-century low.

“Hiring has slowed in the U.S. but remains sufficient to keep the nation’s unemployment rate steady,” said Mark Hamrick, chief economist at Bankrate.com. “That’s likely still the case with the forthcoming January reading.”

Annual long-term revisions also due Friday are anticipated to revise job gains of recent years low. A preliminary projection released in August showed that employers added 501,000 fewer jobs than first estimated as of March 2019. It was the biggest revision in almost a decade.

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The Bureau of Labor Statistics publishes monthly employment statistics, but once a year, checks and revises the estimates those numbers are based on, known as the “benchmark revision.” The number, which is considered more precise, is based on data from state unemployment tax records.

As the U.S. continues the longest economic expansion on record, investors are looking at the Department of Labor’s monthly payroll and unemployment data for signs that the rapid job growth over the past two years is softening and lending way to an overall growth slowdown.

Although consumer confidence remains near historic highs and the three major stock indexes regularly notch records, concerns have been mounting for the past year about an impending slowdown, in part because of the 18-month-long U.S.-China trade war. But tensions between the world’s two largest economies eased late last year after President Trump signed a partial deal with Beijing. Concerns are also growing about how a coronavirus outbreak could affect Chinese -- and global -- economic growth.

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Still, some numbers suggest that Friday’s reading could produce better-than-expected results: Private employers added 291,000 jobs in January, soaring well past the 156,000 that economists initially forecast. It was the best monthly gain in more than five years, according to the latest ADP National Employment Report.

Growth was spread across a swath of sectors, boosted by the services-providing sector, which accounted for 237,000 new positions created last month, while the goods-producing sector added 54,000.

"Mild winter weather provided a significant boost to the January employment gain," Moody's chief economist Mark Zandi said in a statement. "The leisure and hospitality and construction industries in particular experienced an outsized increase in jobs."

The Bureau of Labor Statistics will release its November jobs report at 8:30 a.m. ET Friday.

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