It's the first US labor market report after the Federal Reserve's December policy rate hike, one which is being viewed with much consternation as global economic and financial market conditions have soured dramatically in the first few weeks of 2016. With US economic data already off to a terrible start to the year - it's worst since 2009, according to the Citi Economic Surprise Index - markets are very much of the mindset to question the Fed's intended rate hike path.
The key question today: is US labor market strength strong enough to keep the Fed rate hike optimism afloat? Current expectations for today's data are only decent, with the Unemployment Rate expected to hold at 5.0%, and the headline jobs figure to come in at +190K after December's impressive +292K. Likewise, due to base effects, wage growth figures are due to come in at a muted +2.2% y/y.
The market consensus for today's NFP release seems to be reasonably muted. The two inputs used in the 10-year Nonfarm Payroll Regression Model, ADP Employment Change and the ISM Services Employment sub-index, have both subsided in recent prints. As a result, the regression model is forecasting January Nonfarm Payrolls at +193K. I’ve also included the summary table on the stats.
