Jobs Report May Be A Game-Changer For The Fed (Live Coverage)

• Wall Street expects 67,000 January payroll additions (80,000 private sector offset by 13,000 government decline), with unemployment holding at 4.4% and wage growth slipping to 3.6% from 3.8%
• Fed rate cut odds have increased to 41% for the April 29 meeting (up from 25% a week ago) and 20% for the March 18 meeting, driven by recent soft economic data
• BLS is changing its methodology for estimating job creation from firm births and deaths, while mild January weather and lackluster holiday hiring could skew the seasonally adjusted results

Summary: January Jobs Report Could Shift Fed Policy Direction

Key Figures & Forecast

Wall Street economists expect the January jobs report (released 8:30 a.m. ET) to show modest employment growth:

• 67,000 total payroll jobs added (consensus)
• 80,000 private sector hires, partially offset by 13,000 government job losses
• Estimates range from +30,000 to +100,000 for private payrolls
• Unemployment rate: Expected to hold at 4.4%
• Wage growth: Projected to decline to 3.6% from 3.8% in November

Market Context

Recent data shows weaker-than-expected wage growth and soft retail sales, challenging the Federal Reserve's assessment that labor markets remain stable. Fed Chairman Jerome Powell previously indicated BLS data has systematically overcounted job gains by approximately 60,000 monthly.

Fed Rate-Cut Implications

• 20% probability of rate cut at March 18 Fed meeting
• 41% probability of cut by April 29 meeting (up from 25% a week ago)
• One weak jobs report could shift odds in favor of an April rate cut

Market Response (Pre-Report)

• S&P 500 futures: Up 0.1%
• U.S. Dollar Index: Down to 96.5 (near four-year lows)
• Gold: Surged 2.1% to $5,137/ounce
• Silver: Jumped 6.8% to $85.86

Wild Cards

BLS is implementing new methodology for estimating job creation via firm births/deaths, potentially producing softer payroll readings. However, mild January weather and fewer holiday-related layoffs could offset this effect, creating uncertainty around the actual outcome.