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JOBS DAY — What you need to know in markets on Friday


A holiday-shortened opening week of trading in 2018 will be capped by a jobs report.

Stocks on Thursday surged to record highs with the Dow topping 25,000 for the first time. President Donald Trump told reporters, “I guess our new number is 30,000.”

The S&P 500 and Nasdaq also hit records on Thursday.

These stock market records come a day ahead of the December jobs report, the final look at the labor market from the government in 2017. On Friday, the Bureau of Labor Statistics will release its employment report for December and expectations are another strong report to finish what’s been a good year for U.S. workers.

Expectations are nonfarm payrolls grew by 190,000 in December while the unemployment rate is expected to hold steady at 4.1%, according to estimates from Bloomberg. The unemployment rate is currently at its lowest level since December 2000.

Other figures that economists will keep an eye on in Friday’s report are the labor force participation rate and average hourly earnings.

In November, earnings rose 2.5% over the prior year and expectations are this rate of growth won’t accelerate in December; over the prior month, wages are expected to rise 0.3%. The lack of wage growth in the economy given the low level of unemployment has been a surprise to many economists.

Ian Shepherdson, an economist at Pantheon Macroeconomics, expects wage growth to rise above 3% by late spring of this year and 3.5% by the end of 2018.

A final look at 2017’s labor market will take place on Friday with the release of the December jobs report. REUTERS/Mike Theiler
A final look at 2017’s labor market will take place on Friday with the release of the December jobs report. REUTERS/Mike Theiler

“Wage data will likely be the focal point of [Friday’s] job report,” write economists at Deutsche Bank. “By most measures, the labor market is at full employment and strong job growth should keep the unemployment rate on a downtrend trajectory. However, recent tepid wage growth has allowed some Fed officials to take the position that the labor market is not overheating, permitting them to remain on a ‘gradual’ normalization path.”

Economists at Goldman Sachs forecast that 175,000 nonfarm payrolls were added in December, slightly below consensus, writing in a note on Thursday, “While labor market fundamentals appear solid, we expect a deceleration from the pace of job gains in October and November, which benefitted from a sharp employment rebound in hurricane-affected states. Our forecast also reflects a modest drag from winter storms around the December survey period.”

Goldman says manufacturing surveys, holiday transportation hiring, and the recent ADP reports argues for a stronger report, while winter weather and retail seasonality would point to a weaker-than-expected number.

On Thursday, ADP’s latest reading on private payrolls showed 250,000 private sector jobs were added during the month, with Moody’s Analytics economist Mark Zandi noting that, “Robust Christmas sales prompted retailers and delivery services to add to their payrolls.”

Elsewhere on the calendar on Friday, earnings are expected from beverage giant Contsellation Brands (STZ).

And in what’s been a drama-filled week out of Washington, D.C. Friday should be no different, as the release of journalist Michael Wolff’s already-explosive account of the Trump White House will now be widely available.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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