JPM’s View
Nonfarm Payrolls Forecast: 150K
This Friday’s jobs report may show that pandemic disruptions pushed the unemployment rate back to 4.0% in January. However, there are currently 10.6 million job openings for just 6.3 million unemployed workers. This unprecedented excess demand for labor is leading to higher wages and will likely whittle away at the ranks of the unemployed throughout 2022, particularly with the expiration of federal enhancements to unemployment benefits and the fading of pandemic distortions.

Wells Fargo’s View
Nonfarm Payrolls Forecast: -100k
US Unemployment Rate Forecast: 3.9%
In recent months, there have been substantial revisions to the payroll data each month, and January will bring annual benchmark revisions to the payroll survey, shedding additional light on the underlying trend in hiring. Looking ahead, the Omicron wave looks to have slowed hiring markedly in the first month of 2022. Aside from causing a surge in worker absenteeism due to illness, the hiring process was likely significantly derailed by the wave of new infections, which reached a peak during the survey week. On the other hand, employers' reluctance to part ways with seasonal workers amid increasingly dire shortages of labor might help offset the drag from the sharp acceleration in case counts.

Altogether, we stand apart from the consensus view of a modest gain and expect payrolls to decline by 100,000 in January. We look for the unemployment rate to hold steady at 3.9%, although we note that new population controls for the household survey will be released with January's report, which could add extra noise to the household numbers. Furthermore, we anticipate average hourly earnings to rise by 0.6% during the month, which is slightly faster than consensus expectations as of this writing.

Goldman Sachs' View:
Nonfarm Payrolls Forecast: -250k
US Unemployment Rate Forecast: 3.9%

What is it?
Nonfarm Payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications. This is measured by the Bureau of Labor Statistics (BLS), which surveys private and government entities throughout the U.S. about their payrolls. The BLS reports the Nonfarm Payroll numbers to the public on a monthly basis through the closely followed “Employment Situation” report.

Why is it important?
The NFP report is a key economic indicator for the United States. It is intended to represent the total number of paid workers in the U.S. minus farm employees, government employees, private household employees, and employees of nonprofit organizations.

What are the fundamental effects?
Wages and salaries from employment make up the main source of household income. The more workers there are, the more they buy and propel the economy forward. If fewer people are working, spending drops off and businesses suffer. Both the Federal Reserve and the markets pay close attention.

How does it affect markets?
CURRENCY - A strong report may drive interest rates higher, making the Dollar more attractive to foreign investors.

STOCKS - For stocks little or no growth in employment is generally bad for stocks. Weak sales shrink corporate income and earnings.

BONDS - A series of weak employment reports reflects a more sluggish economy, which may be bullish for bond prices and interest rates may head lower.

Last Months Report:
The US added only 199K jobs in December, much below the 410K consensus and the ADP rate of over 800K.
Unemployment has dropped from 4.2% to 3.9%, with Average Hourly Earnings increasing by 0.6% in the month, compared to the 0.4% projected. This increased the year-on-year rate to 4.7%.
In its earlier 'transitory' premise, the Fed predicted that wage growth would be relatively slow while the epidemic drove up costs until supply chains recovered and inflation returned to 2% or lower. Instead, prices have remained consistently high, and employees are suddenly discovering bargaining power.

The DXY & US Government 10 YR weakened after the release, whereas the S&P 500 and gold saw some strengthening.