January Payrolls Preview: A Small Drop With Big Revisions

After some choppy readings in recent months, the pace of payroll additions is expected to ease towards its recent averages, with the consensus expecting a 175k print in January. 

• While delayed hurricane-related improvements are expected, the California wildfires, colder weather conditions, as well as industrial action could subtract from the headline according to Newsquawk. 
• That said, labor market proxies have generally been encouraging, with initial jobless claims that coincide with the BLS survey window little changed, continuing claims eased, the ADP's gauge of private payrolls surprised to the upside though had more mixed showings for their corresponding wage metrics (more details below).
• Surveys were mixed, the ISM manufacturing employment gauge rose back into expansion after seven months in contraction, the services ISM rose and remained in expansionary territory for a fourth straight month, while the Conference Board's gauge of consumer confidence became more pessimistic of the labor market. 
• Meanwhile, JOLTS data (for December), one of the Fed's preferred labour market gauges, eased in the month, and the sub-indices point towards a slowing of hiring ahead, helping to decelerate wage growth. 

There is additional uncertainty in January, with the BLS set to publish annual benchmark revisions (these were released in a very delayed fashion in August, and the BLS has apparently reviewed its procedures to ensure this does not happen again), and which will likely lead to further downward payrolls revisions (see prior comment).