Event of the Week – Non-Farm Payrolls (USD, GMT 13:30) – A 170k January nonfarm payroll increase is anitcipated, after gains of 223k in December and 256k in November. Annual revisions should raise the level of payrolls through last March by an estimated 462k, though payroll growth is slowing into 2023. A tightening in claims into January implies some upside payroll risk. The jobless rate should tick up to 3.6% from the 3.5% cycle-low that was also seen in September. Hours-worked are assumed to rise 0.1% after a -0.1% December dip, while the workweek holds at 34.3 for a third month. Average hourly earnings are assumed to rise 0.4% after a 0.3% gain in December, while the y/y wage gain should slow to 4.6% from 4.8%. In the last expansion, we saw a 3.5% peak for y/y wage gains in both February and July of 2019, before the pandemic-boost to an 8.0% peak in April of 2020. The ensuing strength in wage gains has allowed continued robust y/y increases in 2022, though the return of low-paid workers to the workforce is likely restraining wage increases.
ISM Non-Manufacturing PMI (USD, GMT 15:00) – The ISM-NMI index should bounce to 50.5 from a 3-year low of 49.6 in December, versus an all-time high of 68.4 in November of 2021, an 11-year low of 41.8 in April of 2020, and an all-time low of 37.8 in November 2008. We’re seeing a 14-month producer sentiment pull-back from robust peaks in November of 2021, with many of the various component categories now in contraction territory.
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