Investors and monetary policymakers are gearing up for a busy week of US economic reports, including what are arguably the two most important data sets of all time: employment and inflation.
The January jobs report is due on Wednesday, with the Consumer Price Index (CPI) expected on Friday, an unusually close occurrence on the data calendar after the partial government shutdown delayed both by a few days. The jobs report is typically released on Friday, with the CPI following the week after.
Job numbers review
The employment report will be more important than usual. In addition to monthly job data and unemployment rates, the January edition of each year includes an annual review of job figures. This so-called benchmark update is expected to reveal a significant slowdown in job growth during the year ending March 2025.
As for the usual monthly figures, economists expect payrolls to have risen by 69,000 jobs in January. This would represent the best performance in four months and offer some reassurance amid further slowdowns in the labor market. The unemployment rate is also expected to hold steady at 4.4%, near its highest level in four years.
Expected slowdown in core inflation
Regarding the Consumer Price Index (CPI) data, economists will be looking for further evidence that inflation is on a downward trajectory, after previous reports were complicated by last year's longest-ever government shutdown. Economists expect core inflation—which excludes food and energy costs—to rise at its slowest annual pace since early 2021.
The Federal Reserve decided to keep interest rates unchanged in January, citing signs of a stabilizing labor market and relatively high inflation. Next week, Federal Reserve Governors Christopher Waller and Stephen Miran, who opposed the decision and favored a further rate cut, are scheduled to speak.
Bloomberg Economics Experts' Opinion
Regarding payrolls, we estimate that the Bureau of Labor Statistics' standard revision will reduce the March 2025 employment level by approximately 650,000 jobs, a somewhat less pessimistic estimate than the consensus forecast. The January jobs report may also fall short of expectations, as the Bureau adjusts its birth and death model to reflect recent weaker employment.
Anna Wong, Stuart Ball, Eliza Winger, Chris G. Collins, Alex Tanzi and Troy Dory, economists
Government data due on Tuesday is expected to show strong retail sales in December. Despite heightened concerns about rising living costs and a volatile labor market, household spending has remained resilient, a trend many economists expect to continue in the near term as annual tax refunds begin to be paid out.
While household spending growth has been strong, the housing market remains burdened by weak affordability constraints. Data from the National Association of Realtors, due to be released on Thursday, is likely to show a decline in previously owned home sales in January.
