The January numbers that are due out at 8:30am Friday are going to be a hot mess express.
Why it matters: We generally look to the monthly jobs report for guidance about how the economy is evolving. That will be harder than usual this month.
It starts with Omicron. The peak of infections occurred in precisely the survey week on which the employment data are based — which meant millions of Americans were home sick, quarantining, or caring for others.
- For people who are salaried employees or received paid sick leave, that shouldn’t affect the numbers. But for people who worked no hours and were unpaid during the reference week, that will show up as jobs that evaporated.
- We got a hint of how big the effects might be in the ADP private sector employment survey published Wednesday, which showed employers cut 301,000 jobs.
The consensus forecast is that payrolls rose by 175,000 in January, but a negative number would hardly be shocking, and the White House is braced for that possibility.
But that’s not all! Several other quirks will make the January numbers hard to parse.
- January is a month with extreme seasonal adjustments, as employers typically cut millions of holiday-season temporary workers. But there is some evidence — very low jobless claims, for example — that the pandemic and labor shortages may have broken those usual seasonal patterns.
- It's possible that employers, hungry for workers, are not cutting jobs the way they normally do after Christmas. If so, that would push job growth numbers up.
Meanwhile: Numbers based off a survey of households, like the unemployment rate, shouldn’t be affected by absences due to Omicron, but have their own problems this month. The Bureau of Labor Statistics updates the data based on new population estimates, which means the January numbers are not directly comparable to December.
- It will also update payroll numbers through an annual benchmarking process matching survey data to actual employment claims.
The bottom line: Maybe don't draw too many huge conclusions about the economy from the data in this very weird month — and have some sympathy for your friendly neighborhood economics writer.
