Author: Jinshi Data
The U.S. Bureau of Labor Statistics (BLS) will release the January non-farm payrolls report at 21:30 Beijing time on Wednesday, which was delayed due to the brief government shutdown. The report will also include annual benchmark revisions and methodological updates.
The market's median forecast indicates that non-farm payrolls will increase by 70,000 in January, compared to 50,000 in December; the unemployment rate is expected to remain low at 4.4%; and average hourly earnings are expected to grow at 0.3% month-on-month, while the year-on-year growth rate is expected to decline to 3.6% from 3.8% in the previous month.
However, many Wall Street economists believe the data will fall short of expectations . For example, TD Securities expects January job growth to remain sluggish, with an estimated increase of only 45,000, in line with Goldman Sachs' forecast; on the other hand, Citigroup predicts an increase of 135,000, but the firm says this figure is due to seasonal distortions, stating that "after reasonable adjustments, job growth is close to zero."
“I think the expected figure should be zero,” said Mark Zandi, chief economist at Moody’s Analytics. “The market consensus is probably around 50,000. Any figure close to zero illustrates how fragile and extremely weak the job market is. There hasn’t been a wave of layoffs yet, but the number will increase soon, and I think we may see negative job growth very soon. ”
Economists' low expectations echo a series of unofficial, private-sector indicators in recent weeks. Last week's data showed a sluggish employment situation, rising layoffs, and virtually no change in the number of new job postings.
Non-farm payrolls annual benchmark revision: poised to erase past growth
Even more challenging is the issue of revising non-farm payroll data—a persistent problem for the U.S. Bureau of Labor Statistics, which has consistently struggled to obtain timely and relevant data.
Last September, the U.S. Bureau of Labor Statistics initially estimated that employment would be down by 911,000 in the year ending March 2025, nearly halved. The agency will release its final revised figure on Wednesday, and the market expects the final number to be lower than the initial estimate, but still significantly so: Goldman Sachs predicts between 750,000 and 900,000, while Federal Reserve Chairman Powell stated a few weeks ago that the revised figure could be closer to 600,000.
Every monthly employment figure released so far in 2025 has been revised downwards, with a cumulative reduction of 624,000 jobs, bringing the average monthly job gain to less than 40,000. Wednesday's report will also include the first revision to the December employment data.
In addition, the U.S. Bureau of Labor Statistics will apply updated business birth-death projections and recalculated seasonal factors to the period from April to December 2025. This adjustment will incorporate updated information from the Quarterly Employment and Wage Census (QCEW) and the monthly employment survey, and is expected to be revised downward by another 500,000 to 700,000 jobs .
In other words, over 1 million jobs in the non-farm payroll data up to December 2025 never actually existed.
In conclusion, the revisions in the January report all point to a sluggish labor market, prompting Powell and his colleagues to pay more attention to this when formulating their next policy steps.
The White House is taking a preemptive stance: Low growth is not a sign of weakness, but rather the new normal.
This week, White House officials continued their efforts to lower market expectations. For President Trump, a dismal jobs report could have adverse political consequences, further complicating his efforts to convince skeptical voters that his policy platform has delivered tangible economic improvements.
"We have to significantly lower our expectations for monthly jobs data," White House chief trade advisor Peter Navarro said in an interview with Fox Business on Tuesday. He pointed out that Trump's policies have reduced the job growth that the labor market needs to create and maintain to achieve "stability."
White House National Economic Council Director Kevin Hassett also said on Monday that multiple factors have combined to cause low job growth, at least in the short term.
The most significant factor is the government's crackdown on illegal immigration. Hassett also mentioned that the development of artificial intelligence has boosted productivity, thus suppressing companies' hiring needs.
“I think people should expect the employment data to be slightly lower, which is consistent with the current high GDP growth… If we see a series of numbers that are lower than usual, there’s no need to panic,” he said on Monday. “It’s unusual for population growth to be slowing while productivity is soaring.”
Hassett added that a scenario could emerge where "job creation lags behind, productivity soars, profits soar, and GDP soars."
The labor market has shown signs of deterioration.
Several recent signs indicate that the labor market is deteriorating.
Data from the U.S. Bureau of Labor Statistics shows that job openings plummeted to their lowest level since September 2020 in December; meanwhile, a report from workplace consulting firm ChallengerGray & Christmas states that both planned layoffs and hiring in January recorded their worst January performance since the 2009 global financial crisis; in addition, a report from ADP shows that the private sector added only 22,000 jobs in January.
Nevertheless, there are some positive signs: Homebase data shows that small business jobs grew by 3.3% last month, better than the 3.1% in January 2025 and far higher than the 1.3% in the same period of 2024.
Federal Reserve states: More concerned about inflation, no rush to cut interest rates
From the Federal Reserve's perspective, policymakers focus on employment trends over a period of time, rather than single-month data. Most officials expect that the slowdown in hiring, accompanied by a low layoff rate, does not indicate a substantial weakening of the economy, but rather points to stability.
In their speeches on Tuesday, Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack both said they believed the U.S. economy was progressing well, but were more concerned about inflation than unemployment, while questioning the necessity of further interest rate cuts.
“Instead of fine-tuning the federal funds rate, I prefer to remain patient, assess the impact of recent rate cuts, and monitor economic performance,” Hamak said. “Based on my projections, we are likely to remain on hold for a considerable period of time.”
Federal Reserve Governor Lisa Cook said earlier this month that she believes last year's interest rate cuts will continue to support the labor market. She noted that the labor market has stabilized and is broadly balanced, adding that policymakers remain highly vigilant for potential rapid changes. Similarly, Governor Philip Jefferson believes the job market is likely in a balanced state, characterized by low hiring and low layoffs.
The CME Group's FedWatch Tool shows that the market currently expects a 15% probability of a 25 basis point rate cut in March .
Potential market reaction
FXStreet analysts believe that if the non-farm payroll data disappoints, with fewer than 30,000 new jobs added and an unexpected rise in the unemployment rate, the dollar could come under immediate pressure. On the other hand, if the non-farm payroll data meets or exceeds market expectations, it could reconfirm that the Federal Reserve will maintain its current policy next month. Market positioning suggests that in this scenario, the dollar still has room to rise.
Investors will also be closely watching the report's section on wage inflation. If average hourly wage growth falls short of expectations, even if non-farm payroll data comes close to market expectations, the dollar will struggle to gain upward momentum.
Analysts at Danske Bank pointed out that slower wage growth could negatively impact consumer activity and pave the way for the Federal Reserve to take accommodative action.
They explained, “The Challenger Gray & Christmas report showed that layoffs in January exceeded expectations, while job openings in December were 6.5 million (market expectation was 7.2 million), so the job openings-to-unemployment ratio fell to 0.87 that month. This cooling is usually a good sign of slowing wage growth, which could raise concerns about the outlook for private consumption, and all else being equal, it supports the case for the Fed to cut interest rates sooner than expected .”
The current market calm is precisely a harbinger of an impending storm. Gold prices halted a two-day winning streak on Tuesday, but the pullback was largely an "event-driven" consolidation.
David Meger, head of metals trading at High Ridge Futures, pointed out that this is a natural market reaction ahead of a large amount of important economic data releases. Faced with uncertainty, investors often lock in some profits or temporarily exit the market, thus putting downward pressure on gold prices.
Despite short-term fluctuations, the fundamental factors supporting the long-term upward trajectory of gold prices remain unshaken, and have even strengthened . Firstly, a weaker dollar has provided support for gold. On Tuesday, the dollar index fell to its lowest level since January 30th due to weak US retail sales data. A weaker dollar makes dollar-denominated gold cheaper for overseas buyers, thereby boosting demand.
Secondly, signals from the bond market also favored gold. On Tuesday, U.S. Treasury yields fell across the board, reflecting growing market concerns about slowing economic growth and increasing expectations of a Federal Reserve rate cut. The decline in bond yields enhanced the relative attractiveness of gold.
Finally, and perhaps most importantly, the "safe-haven premium" driven by geopolitical tensions continues to fuel the gold bulls.
