Synopsis:

Morgan Stanley forecasts a 140k payroll gain for January, citing weather-related disruptions, with no major impact from benchmark revisions on recent data.

Key Points:

1. Weather Effects to Hold Down Payrolls:

   • California wildfires and colder weather are expected to dampen job gains.
   • Payrolls are projected to rise by 140k, below recent trends.

2. Unemployment Rate to Stay Flat:

   • The jobless rate is expected to remain at 4.1%, signaling a stable labor market.

3. Wage Growth to Continue on Trend:

   • Average hourly earnings are forecast to increase by 0.3% MoM, consistent with prior trends.

4. Limited Impact from Benchmark Revisions:

   • The annual payroll benchmark revision will likely lower past payroll estimates by 70k per month (through March 2024).
   • However, Morgan Stanley does not expect significant spillover into more recent job reports.

Conclusion:

Morgan Stanley sees January’s job report as softer but not alarming, with weather-driven payroll weakness and stable unemployment. Wage growth should remain steady, and benchmark revisions are unlikely to significantly alter recent labor trends.