Synopsis:

Goldman Sachs forecasts 190k payroll growth (vs. 170k consensus) in the January jobs report, with significant revisions to past data due to immigration-related adjustments. The unemployment rate is expected to remain at 4.1%, while average hourly earnings (AHE) should rise 0.3% m/m.

Key Points:

1. Payroll Growth & Weather Impact

   • Payrolls forecast: +190k (above consensus).
   • LA wildfires and colder weather expected to subtract ~40k from the headline number.

2. Wages & Labor Market Indicators

   • Unemployment rate steady at 4.1%.
   • Average hourly earnings (AHE) expected to rise 0.3% m/m.

3. Major Data Revisions Expected

   • Benchmark revisions could reduce cumulative job growth by 818k (Apr 2023 - Mar 2024).
   • Goldman estimates 300-500k unauthorized immigrants will be inaccurately removed from payroll records, making the downward revision misleading.

4. Household Survey Adjustments

   • Revised immigration estimates will add 3.5mn to the US population.
   • Household employment expected to increase by 2.3mn.
   • Labor force participation rate could rise by 0.11pp, while unemployment ticks up 0.04pp due to composition effects.

Conclusion:

Goldman Sachs expects a strong jobs report, but the key focus will be on large revisions to employment data due to adjustments in immigration estimates and state records. Despite potential headline payroll losses from revisions, the underlying labor market remains solid.