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The big January jobs report comes out Friday. Here’s what to expect

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A hiring sign is posted on the door of a Taco Bell on August 22, 2024 in Alexandria, Virginia. 

Anna Rose Layden | Getty Images

The U.S. labor market likely began 2025 in solid fashion, if a bit of a step down from where it closed the previous year.

When the Bureau of Labor Statistics releases its nonfarm payrolls count for January, it is projected to show growth of 169,000, down from 256,000 in December but nearly in line with the past three-month average. The unemployment rate is projected to stay at 4.1%, according to the Dow Jones consensus for the report, which will be out Friday at 8:30 a.m. ET.

While the takeaway could be that job creation is slowing, the broader view is that the employment picture is holding solid, and it’s not likely to be a problem for the Federal Reserve anytime in the near future.

“With inflation at least for now at tolerable levels and firms very comfortable making sustained investment, there’s no reason why we shouldn’t continue to see job growth around 150,000 per month, which is the upper end of what’s needed to keep the labor market stable,” said Joseph Brusuelas, chief economist at RSM. “In other words, we’re at full employment. This is a good problem to have.”

By the time the Fed concluded its final three meetings of 2024, it had cut its key borrowing rate by a full percentage point. In good part, this was because policymakers sought to support a labor market that showed signs of weakening.

However, recent indicators show that while hiring has leveled off, layoffs aren’t increasing and workers aren’t quitting though job openings are on the decline.

Such relative stability is a welcome sign with the likelihood that the Fed will be on hold, possibly until summer, while officials wait to see the fallout of President Donald Trump‘s fiscal agenda that includes aggressive tariffs against the largest U.S. trading partners.

“The economy is still going to roll on, people are going to make investment decisions, they’re going to get up each morning and go to work,” Brusuelas said.

Annual revisions to take focus

Though the usual payroll number is expected to show more or less status quo conditions, markets also will be watching annual benchmark revisions to both the establishment and household surveys that the BLS compiles.

When the initial revisions were released in August 2024, they showed a stunning 818,000 fewer jobs created than previously reported in the establishment count from April 2023 to March 2024. That total is expected to come down considerably as adjustments are made for immigration and population.

The revisions also are projected to show a record increase of 3.5 million in the population and 2.3 million in household employment, according to Goldman Sachs. The firm sees more modest adjustments upward in labor force participation and unemployment.

The two BLS surveys have differed sharply in the post-Covid years. The establishment survey is used to calculate the nonfarm payrolls number while the BLS derives the unemployment rate from the household count. The latter has shown a less optimistic view of employment conditions that could be corrected with the revisions.

In any event, if the report comes in anywhere near expectations, it’s unlikely to move the needle for the Fed even with the tariff question lingering.

“The labor market is a lot more important to the Fed than what’s going on with tariffs,” said Eric Winograd, director of developed market economic research at AllianceBernstein. “The payrolls numbers are volatile. Anything can happen in any given month. But there’s nothing in particular that makes me think that this month’s print will look meaningfully different than the past few, and that’s enough to keep the Fed on hold.”

In addition to the headline payroll numbers and revisions, the BLS will release data on average hourly earnings.

The estimate is for January to show a 0.3% increase in wages and a 3.7% 12-month increase. If the annual figure is correct, it will be the lowest level since July 2024.

Economics

Why the president must not be lexicographer-in-chief

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Who decides what legal terms mean? If it is Donald Trump, God help America

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Economics

Inflation rate slipped to 2.1% in April, lower than expected, Fed’s preferred gauge shows

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Inflation rate slipped to 2.1% in April, lower than expected, Fed’s preferred gauge shows

Inflation barely budged in April as tariffs President Donald Trump implemented in the early part of the month had yet to show up in consumer prices, the Commerce Department reported Friday.

The personal consumption expenditures price index, the Federal Reserve’s key inflation measure, increased just 0.1% for the month, putting the annual inflation rate at 2.1%. The monthly reading was in line with the Dow Jones consensus forecast while the annual level was 0.1 percentage point lower.

Excluding food and energy, the core reading that tends to get even greater focus from Fed policymakers showed readings of 0.1% and 2.5%, against respective estimates of 0.1% and 2.6%.

Consumer spending, though, slowed sharply for the month, posting just a 0.2% increase, in line with the consensus but slower than the 0.7% rate in March. A more cautious consumer mood also was reflected in the personal savings rate, which jumped to 4.9%, up from 0.6 percentage point in March to the highest level in nearly a year.

Personal income surged 0.8%, a slight increase from the prior month but well ahead of the forecast for 0.3%.

Markets showed little reaction to the news, with stock futures continuing to point lower and Treasury yields mixed.

People shop at a grocery store in Brooklyn on May 13, 2025 in New York City.

Spencer Platt | Getty Images

Trump has been pushing the Fed to lower its key interest rate as inflation has continued to gravitate back to the central bank’s 2% target. However, policymakers have been hesitant to move as they await the longer-term impacts of the president’s trade policy.

On Thursday, Trump and Fed Chair Jerome Powell held their first face-to-face meeting since the president started his second term. However, a Fed statement indicated the future path of monetary policy was not discussed and stressed that decisions would be made free of political considerations.

Trump slapped across-the-board 10% duties on all U.S. imports, part of an effort to even out a trading landscape in which the U.S. ran a record $140.5 billion deficit in March. In addition to the general tariffs, Trump launched selective reciprocal tariffs much higher than the 10% general charge.

Since then, though, Trump has backed off the more severe tariffs in favor of a 90-day negotiating period with the affected countries. Earlier this week, an international court struck down the tariffs, saying Trump exceeded his authority and didn’t prove that national security was threatened by the trade issues.

Then in the latest installment of the drama, an appeals court allowed a White House effort for a temporary stay of the order from the U.S. Court of International Trade.

Economists worry that tariffs could spark another round of inflation, though the historical record shows that their impact is often minimal.

At their policy meeting earlier this month, Fed officials also expressed worry about potential tariff inflation, particularly at a time when concerns are rising about the labor market. Higher prices and slower economic growth can yield stagflation, a phenomenon the U.S. hasn’t seen since the early 1980s.

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German inflation May 2025

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19 May 2025, Berlin: Apricots are sold at a greengrocer for 7.98 euros per kilogram. Grapes and papaya are also on offer.

Photo by Jens Kalaene/picture alliance via Getty Images

Germany’s annual inflation hit 2.1% in May approaching the European Central Bank’s 2% target but coming in slightly hotter than analyst estimates, preliminary data from statistics office Destatis showed Friday.

The print compares with a 2.2% reading in April and with a Reuters projection of 2%.

The print is harmonized across the euro zone for comparability.

So-called core inflation, which strips out more volatile food and energy prices, dipped slightly from April’s 2.8% to 2.9% in May. The closely watched services print meanwhile eased sharply, coming in at 3.4% compared to 3.9% in the previous month.

Energy prices fell markedly for the second month in a row, tumbling by 4.6% in May.

Germany’s consumer price index has been closing in on the European Central Bank’s 2% target over recent months, in a positive signal amid ongoing uncertainty about the economic outlook for Europe’s largest economy.

Domestic and global issues have mired expectations for Germany’s financial future.

One the one hand, U.S. President Donald Trump’s tariffs could damage economic growth, given Germany’s status as an export-reliant country, though the potential impact of such duties on inflation remains unclear. But frequent policy shifts and developments have been muddying the picture.

On the other hand, Germany’s newly minted government is starting to get to work and has made the economy a top priority. Questions linger about when and to what extent the new Berlin administration’s policy plans might be realized.

The ECB is set to make its next interest rate decision on June 5, with traders last pricing in an over 96% chance of a quarter point interest rate reduction, according to LSEG data. Back in April, the central bank had cut its deposit facility rate by 25 basis points to 2.25%.

This is a breaking news story, please check back for updates.

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