High points for economic data scheduled for January 1 week

The week begins with the January 1 holiday that results in some shifts in the normal economic data release calendar. The ISM reports – manufacturing and services, respectively – for December will be out one day later than usual on the second and fourth business days of January rather than the usual first and third. The ADP report will be released on Thursday rather than Wednesday. The MBA report on mortgage applications will be on Wednesday as usual but include two weeks of data after the holiday break in the prior week.

Most of the week’s data is crammed into the Wednesday-Friday period, and much of it pertains to labor market conditions in December. Although early signs are that December layoff activity was less than usually seen around the end of the year, the pace of hiring may well have slipped as the US economy saw more modest growth in the fourth quarter.

Early estimates of nonfarm payrolls for December look for a tempered 150,000 in job gains. There may be some residual increases after the settlement of the UAW and SAG-AFTRA strikes, but manufacturing and services should see minimal influence at this point. What may be more of a factor is that businesses have made their staffing plans for next year and are hiring now where they can find qualified workers rather than waiting to recruit in a still tight labor market. Historically, the December change in nonfarm payrolls comes in above expectations and is revised higher in the next month’s report. An upside surprise is not likely for this December with businesses cautious on the economic and geopolitical outlook even with the FOMC signaling a peak in current short-term rates. The payroll report is set for release at 8:30 ET on Friday.

The minutes of the December 12-13 FOMC meeting will be three weeks behind in the available information for Fed policymakers but could hold some clues about the thought underlying the forecasts in the summary of economic projections (SEP). In question is the immediacy with which Fed policymakers discussed possible rate hikes. Comments by policymakers in the wake of the meeting suggest that Chair Powell’s remarks at his December 13 press briefing were interpreted as if rate cut discussion were far more advanced than they are. Some Fed officials have walked back that idea and reiterated that restrictive monetary policy is expected to stay around for a while yet depending on the inflation data.