Economists Are Expecting January Job Growth To Fall Behind December: Is Extreme Weather To Blame For The Slump?

The first jobs report of the year will be out 8:30 a.m. ET Friday morning, lending a glimpse into the cumulative effects of almost one full year of rising interest rates from the Fed.

On Wednesday, the Federal Reserve issued a new hike of 0.25%, taking the federal funds rate to between 4.50% and 4.75%.

While experts are expecting the new reduced hike to augur the end of the hike cycle, Fed Chair Jerome Powell said in his latest speech that "it would be premature to declare victory."

The last jobs report showed that in December 2022, 223,000 jobs were added to the economy, by far surpassing economist estimates. Unemployment was also better than economists had anticipated, at a historical low of 3.5%.

On Wednesday, private research institute ADP issued its own jobs report that anticipates that 106,000 were added jobs in January: less than half of what the Labor Department had confirmed for the previous month.

Extreme weather events battering the country during January were behind the hiring slump, according to ADP.

Nela Richardson, the institute's chief economist, acknowledged the climate events that occurred during the sample week ADP used to provide the outlook.

"Hiring was stronger during other weeks of the month, in line with the strength we saw late last year," said Richardson.

According to market data firm Refinitiv, economist estimates for jobs added in January fall behind last month's number, but better than ADP's predictions, at a consensus of 185,000.

Photo via Shutterstock.

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