In 20 minutes we will get the only market moving piece of news, which many hope will bring back volatility to the market. Or it might not. As Goldman says, 'nonfarm payroll growth should slow on seasonal and weather-related factors'
8:30: Employment Report (January): Slower payroll growth; lots of technical factors. Despite better signs in a number of labor market indicators, we forecast that payroll employment growth slowed to +125k in January from +200k in December. The deceleration largely reflects less of a weather-related boost (weather remains milder than usual, but not much more so than in December) and a reversal of positive seasonal adjustment distortions in the December survey (last month the category of “couriers and messengers” was boosted by 42k on temporary hiring for package delivery persons during the holidays; this increase is likely to be reversed in the January report). Even with slightly slower payroll growth, we still think the unemployment rate should fall to 8.4% from 8.5%, although this is a close call.
Today’s report will also include annual benchmark revisions to both the payroll and household surveys. In the payroll survey, the BLS we realign the level of employment with unemployment insurance records. In September 2011, the BLS estimated that this would add 192k to the level of employment. Today’s final announcement should be close to that figure. Historical data will also be revised for new seasonal adjustment factors and updates to the “birth/death” model. Separately, the household survey will be adjusted for new “population controls” incorporating data from the 2010 Census (essentially these are the scaling factors used to translate the monthly survey into a national estimate). These revisions mean that the raw change in household employment will have virtually no meaning. The BLS will report adjusted household employment estimates which remove the effect of revised population controls, and investors should focus on these figures.
Payrolls: GS: +125k; Consensus: +140k; Last +200k.
Unemployment: GS 8.4%; Consensus: 8.5%; Last 8.5%.
Earnings: GS +0.2%; Consensus: +0.2%; Last: +0.2%.
10:00: ISM non-manufacturing index (January): Little changed. Goldman forecasts that the ISM non-manufacturing index was unchanged at 53.0 in January. At its current level, the non-manufacturing ISM is consistent with GDP growth of about 1.5-2.0%.
GS: 53.0; Consensus: 53.2; Last 52.6.
10:00: Factory orders (December): Q4 GDP revisions? The already-released durable goods report suggests that total factory orders likely increased in December—we forecast a gain of 1.5% month-over-month. Revisions to durable goods shipments or news on inventories could imply revisions to Q4 GDP growth.
GS: +1.5%; Consensus: +1.5%; Last +1.8%.
from Goldman Sachs