- Macro Monday
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- It's Jobs Week!
This is a big week for macro data. Kicking off Monday, we get January’s national PMIs, starting with the ISM Manufacturing Index. Then, on Friday, payrolls drop—but this isn’t just any jobs report. The BLS’s annual revisions are baked in, reshaping key metrics like Personal Income, Gross Domestic Income (GDI), and Productivity.
We already have some clues: three of the four major regional PMIs rose in January, including their Employment components (see chart above). Nothing’s certain until the data lands, but the odds favor a solid national PMI read. Stay tuned.
The Macro Week Ahead
The Fed Hits Pause:
This week is packed with major macro data. The Bloomberg Economic Surprise Index has flipped from slightly negative to slightly positive, signaling stronger-than-expected U.S. growth and inflation figures. Last week, the Fed hit pause on rate cuts, with Chair Powell cautioning that inflation progress remains sluggish. Core PCE for December landed at 2.8% year-over-year (+0.2% month-over-month), still above the Fed’s 2% target.
January LEIs: A Turning Point?:
At 10:00 am, ISM Manufacturing data is released, with the headline number expected to hit the critical threshold of 50 - the highest reading in over a year. December’s New Orders component came in at 52, hinting at a cyclical upturn from last summer’s contraction. Prices Paid climbed to 52 in December, with January forecasts at 55, reinforcing expectations for firm inflation in the near term. With the Fed having cut rates by 100 bps in an economy running above average capacity, inflation won’t cool easily.
On Wednesday, ISM Services is expected to hold steady at 54, with the Prices Paid component last month surging to 64. If recent shifts in U.S. immigration policy tighten labor supply in services, this index could stay strong.
It’s Jobs Week!:
We kick off with ISM Manufacturing’s employment component, which was a weak 45 in December. On Tuesday, JOLTS data will show us job openings, quits, and layoffs for December. The openings rate peaked in mid-2022, and trends suggest we hit the cyclical low in fall 2024. Layoff rates remain low at 1%, and initial claims data point to a resilient labor market.
Wednesday brings ADP’s payroll estimate, with 150,000 jobs expected for January. Thursday follows with jobless claims and Challenger job cut reports.
Revisions & Payrolls: Watch the Data:
Friday is a big day - the BLS Payrolls report drops, along with annual revisions to the establishment survey (April 2023–October 2024). The August preliminary revision cut 818,000 jobs - one of the biggest downward adjustments in a decade. Notably, Powell referenced this data when justifying last year’s rate cuts.
For January, non-farm payrolls are expected to show a gain of 170,000 jobs, down from December and November’s 200,000+ prints. The unemployment rate is forecast to hold at 4.1%, consistent with the past six months.
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