The U.S. labor market faces one of its most influential data releases of the year on Wednesday at 8:30 a.m. ET, when the January jobs report lands with unusually high stakes for markets and Federal Reserve policy.
The January employment report is not just the first reading of the year—it includes annual benchmark revisions tied to the Quarterly Census of Employment and Wages (QCEW), updates to the Bureau of Labor Statistics' birth-death model, and new seasonal adjustment factors.
Together, these updates could materially alter the historical payroll path, just as markets debate whether the labor market is cooling smoothly or losing momentum more abruptly.
Bank of America economist Shruti Mishra called it "the Super Bowl of jobs reports," and for good reason. It's not just the first monthly print of 2026—it's a statistical overhaul.
Why This Jobs Report Carries Extra Weight
In addition to January payrolls and the unemployment rate, traders and analysts will be digesting revisions to prior data that could reshape the narrative about labor momentum heading into 2026.
Bank of America forecasts January nonfarm payrolls to rise by 45,000, well below consensus. The unemployment rate is expected to hold steady at 4.4%.
The softer payroll forecast reflects expected downward revisions tied to the updated birth-death model. Excluding that effect, economists expect underlying job growth of about 75,000.
Median Wall Street estimates tracked by Trading Economics point to 70,000 jobs added in January, up from 50,000 in December. The unemployment rate is also forecast to remain at 4.4%.
How Large Could Be The Annual Revisions?
The BLS will benchmark payrolls from April 2024 through March 2025 against the latest QCEW data—often considered the most accurate measure of total employment.
Bank of America estimates that payroll employment as of March 2025 will be revised down by 800,000-850,000 jobs, or roughly 65,000–70,000 per month.
The revision would still be historically large but smaller than the preliminary estimate of a 911,000-job cut.
Most of the markdown is expected to fall in the second half of 2024. Leisure and hospitality, trade and transportation and professional and business services should bear the brunt.
From April 2025 onward, economists expect the updated Birth-Death model to subtract another 20,000 to 30,000 jobs from monthly payroll growth.
What Investors Should Look At
The timing matters more than the size.
If revisions remain concentrated in late 2024, they may matter less to markets. Policymakers focus more on the recent outlook than on backward-looking data.
The Fed already assumed payroll growth was overstated by about 60,000 jobs per month. Revisions near that range would largely confirm expectations.
How may markets react? According to Bank of America, revisions of nearly 800,000 jobs are unlikely to materially shift Fed policy if the central bank stays focused on 2024.
“Larger downward revisions (over 1 million) or clear evidence that job growth weakened meaningfully in early 2025 would skew risks in the dovish direction,” Mishra said.
- The expert indicated that investors should look at three areas that truly matter.
- Movement in the January unemployment rate
- The size and timing of benchmark revisions, especially whether they spill into early 2025
- An outlier January payroll print, particularly one far below the estimated breakeven of ~20,000 jobs
“The January unemployment rate will matter even more to the markets than payrolls,” Mishra said.
“Given the ongoing labor demand and supply shocks, a meaningful u-rate move either way would provide a clearer signal amid the noise of revisions,” she added.
Ahead of the release, markets are pricing in two Fed rate cuts for this year, with the first 25-basis-point move expected for June.
The Dow Jones Industrial Average – tracked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) – set fresh record highs on Tuesday.
Image: Shutterstock
- No comments yet. Be the first to comment!