Barring another US government shutdown (don’t laugh: the situation inside the Beltway’s even more dysfunctional than the governing dynamic in France, no small feat of foundering), the BLS will release two crucial macro updates this week, one right on top of the other.
Due to a second funding gap in four months, the January jobs report was pushed from February 6 to February 11, and CPI data covering last month will be published just 48 hours later, on February 13.
Meanwhile, over at the Commerce Department, the Census Bureau will release two-month old data on retail sales Tuesday morning. At the same time, the BLS will publish the Employment Cost Index for Q4.
If you’re the type who abhors disarray, this sort of chaotic, ad hoc data dissemination is… well, abhorrent. And as discussed here last week, the belated nature of these releases testifies loudly to America’s rolling institutional credibility crisis.
As BMO’s Ian Lyngen noted, Treasury didn’t change the auction schedule for this week, which means Wednesday’s $42 billion 10-year sale will play out in the wake of a jobs report with the potential to recast a US labor market narrative that’s already in flux after a raft of discouraging updates including a lackluster read on private hiring, a wholly unfortunate account of January layoff plans, a big drop in job openings and a sudden uptick in jobless claims.
As far as I can tell, consensus for the January NFP headline hasn’t changed to account for any of those alternative releases which, as Lyngen remarked, means there’s “downside risk for payrolls versus the 70,000 estimate.”
Plugging in the historical revisions to the ADP private hiring series and adjustments to Revelio’s alternative NFP tally, the three-month moving average for hiring was just over 33,600 in December.
The average of ADP and Revelio for January was just 4,364 (orange annotation in the figure), hence the above-mentioned downside risk.
As if this weren’t convoluted enough already, the BLS release will be accompanied by the final run at the annual benchmarking revision. I went over that at length in last week’s macro preview so I won’t recapitulate here other than to remind readers that the preliminary estimate, published in September, suggested job growth for the year to March 2025 was overstated by more than 900,000.
The inflation update will probably show underlying price growth in the US ran 0.3% in January. The BLS is still trying to redeem itself from what, even in the context of no-win situations, was an unforced error late last year, when the bureau chose the worst among a menu of bad options for guesstimating missing inflation data.
The last CPI report, covering December, put core inflation at 0.239% unrounded on a MoM basis at year-end 2025, a favorable result. The YoY print, at 2.6%, was likewise below estimates.
That’s the set up for the January readout which, frankly, I don’t think too many people will care about. In the absence of a multi-sigma upside surprise (which simply isn’t on the cards), there’s no read-through for monetary policy. Yes, the tweaks to the January FOMC statement suggested the balance of risks is more balanced now (which in this context means officials are no longer as inclined to look past sticky inflation to protect jobs), but if last week’s labor market data was any indication, jobs growth has just slowed again.
If core CPI comes in low, that may increase the odds of another cut before Jerome Powell’s tenure as Chair expires, particularly if the jobs report’s weak, but that’s a lot of “mays” and “ifs,” and it anyway doesn’t matter. The Fed’s under Donald Trump’s thumb beginning with the June meeting (you can spare me the bit about Kevin Warsh zealously guarding the institution’s independence, as if Trump would’ve chosen him had Warsh not pre-committed to playing ball).
Even if it weren’t (under Trump’s thumb), the labor market’s likely to give the Committee’s doves, some of them erstwhile hawks, enough plausible deniability to push for cuts regardless of inflation outcomes.
Also on deck in the US this week: The NY Fed’s monthly consumer survey, existing home sales and builder sentiment.
