The Week Ahead: Looking for resilience and revisions in the latest employment numbers

There is no winter cold in the American job market. Companies created more than half a million new jobs at the beginning of the year. And there were 11 million job openings in December. The latest jobs data will be the focus in the coming week.

First – BACK. The Job Vacancy and Turnover Survey captures employer demand for workers. It is a measure of how labor demand matches labor supply. And there is still a big discrepancy.

The January JOLTS report will be released on Wednesday. Mild weather may have helped support homebuilder hiring, although higher interest rates have increased the cost of borrowing for real estate. The loss of tech jobs will weigh on the market, as will the end of the holiday season. Nonetheless, the number of vacancies is likely to remain significantly higher than the number of unemployed, underscoring tight labor market conditions that are helping to push up wages and underpinning inflation.

The February job market report will come out on Friday. January data showed a surprisingly strong job market with companies adding 517,000 jobs. The February report is expected to show a significant slowdown in the pace of hiring – perhaps by more than 50 percent. However, an economy that adds 200,000 new jobs in a month can hardly be viewed as one on the brink of recession. Instead, it would indicate companies’ resilient ability to create new positions. And it would give the Federal Reserve more evidence that it can raise interest rates more to fight inflation without triggering widespread layoffs.

These employment reports are also examined for revisions to previous publications. Government statisticians routinely improve monthly data as more complete information arrives. For example, in January, the Bureau of Labor Statistics revised its November and December job counts, adding 71,000 more jobs than originally reported.

Continued strength in employment underpins the Federal Reserve’s determination to continue raising interest rates to cool inflation. The market is pricing in a stronger central bank response later this month than was forecast four weeks ago. According to the CME FedWatch Tool, the chances that regulators could hike rates again by half a percentage point are increasing.

After a sharp rally in equities in January on belief that the Fed was close to ending rate hikes, investors have revised their outlook as inflation – and employment – have remained resilient.

Tom Hudson is a financial journalist and chief content officer at public radio WAMU in Washington, DC. Follow him on Twitter @HudsonsView.