NFP:  smaller gains expected going forward - Wells Fargo

On Friday, the US employment report will be released. Analysts from Wells Fargo expect a reading around 175K. Going forward, they expect smaller gains because of the low jobless rate.

Key Quotes: 

“December’s 148,000-job gain was smaller than the consensus estimated, weighed by a drop in retail employment. Retailers needed fewer workers this December, as an earlier Thanksgiving likely pulled holiday hiring forward to November, while brick and mortar stores continued to adjust to competition from online shopping. Conversely, the goods sector ramped up hiring at the end of the year. 

“Although December’s print was a bit tepid, it followed strong gains in October and November. The economy added 203,700 jobs on average in Q4, which was its strongest three-month average since September 2016. Looking to the trend, 171,300 jobs were added per month, on average, in 2017.”

“We expect the magnitude of monthly gains will slow to 163,000 jobs in 2018 and 148,000 jobs in 2019. We expect smaller gains going forward because of the low jobless rate, which we see averaging 4 percent in 2018 and 3.8 percent in 2019”.