Jan US employment report to confirm uptrend in the labour market

US employment report for January is likely to show that the uptrend in the labour market is set to continue in 2016. However, it is unlikely to repeat the strong December figure which saw 292,000 new jobs in December. While the US economy probably barely grew in the final quarter of 2015, the labour market has continued to produce positive headlines. 

Exceptionally mild weather recently is likely to have supported employment. And the somewhat higher number of initial jobless claims in January also argues for slower payroll growth. The recovery in the labour market will benefit the sectors that primarily depend on domestic demand. Upbeat employment report would make it more likely that the Fed will raise interest rates further in March.

"For the current month, we forecast an increase of 200,000 (consensus: 200,000), which should push the unemployment rate down by one tenth to 4.9% (consensus: 5.0%). From the Fed's perspective, the stagnation of average hourly wages may have been the only negative aspect in the December report. Since a special effect seems to have played a role here, we expect a catch-up effect for January that  should drive the increase to 0.3% on the month consensus: 0.3%)," said Commerzbank in a note to clients.