WASHINGTON -- U.S. employment likely rebounded in January after being held back by cold weather the prior month, which would offer assurance that economic growth wasn't faltering.
Nonfarm payrolls are expected to have increased by 185,000 last month, according to a Reuters survey of economists, with the jobless rate seen holding at a five-year low of 6.7 percent. Economists also expect December's paltry count of 74,000 net new jobs, viewed by many as an anomaly, to be raised sharply.
"We are far from having a booming economy, but we are growing increasingly confident that the economy is developing enough internal momentum to reach take-off velocity," said Bill Hampel, chief economist at the Credit Union National Association in Washington.
A report Monday showing a surprise drop in factory activity to an eight-month low in January spooked investors and fanned fears of a rapid cooling off in growth after the economy's robust performance in the second half of 2013.
But a reading on the dominant services sector Wednesday showed a fairly strong expansion in activity in January.
The monthly jobs report, always closely watched by financial markets around the globe,
While economists anticipate the labor market fared much better last month, relentless freezing temperatures present a wild card.
"If we get another low, disappointing number, it will change the short-term economic outlook," said Keith Hall, a senior scholar at Mercatus Center at George Mason University in Arlington, Va.
A brightening growth picture encouraged the Federal Reserve last month to move forward with a scaling back of its bond-buying stimulus. Officials at the U.S. central bank will be anxious to see payrolls snapping back from their weather-depressed December level.
While the unemployment rate is forecast holding steady, there is a risk it could decline even further in January because jobless benefits for more than one million long-term unemployed Americans expired at the end of December. If they have since given up the search for work, they wouldn't be considered as being in the labor market and unemployed.
Another Drop in the Jobless Rate
"If some long-term unemployed give up looking for work when their benefits run out, we could see another drop in the labor force participation rate," said Hall, a former commissioner of the Bureau of Labor Statistics.
"Conversely, people who lost their benefits might be forced to take a less desirable job, moving them from unemployed to underemployed."
The participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell 0.2 percentage point to 62.8 percent in December, returning to the more than 35-year low hit in October.
A further decline could depress the unemployment rate, which is already flirting with the 6.5 percent level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.
But policymakers have made it clear that rates won't rise any time soon even if the unemployment threshold is breached.
"The Fed will start to stress other measures of labor market slack in their guidance on when they are going to raise interest rates," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pa
The unemployment rate tumbled 0.3 percentage point in December, taking the drop in 2013 to 1.2 percentage points. Friday's report will include revisions to data on payrolls, the workweek and earnings going back to 2009.
The government said last year that the revisions to this data, which is drawn from a survey of employers, would likely show that 345,000 more jobs than previously thought were created in the 12 months through March 2013.
The report will also incorporate new population estimates. This means the employment and labor force figures that are derived from the government's survey of households won't be comparable to December.
The private sector is expected to account for all the hiring in January. Government payrolls are seen holding steady. Manufacturing employment likely rose for a sixth month, while hiring in the retail sector probably slowed after strong increases in the prior months.
While most economists think construction payrolls bounced back after being depressed by the weather in December, frigid temperatures last month may have pushed them down again.
Average hourly earnings likely rose by 0.2 percent after edging up 0.1 percent in December. The length of the workweek is seen steady at an average of 34.4 hours.