(Reuters) – U.S. hiring likely snapped back from a three-year low in January and kept the unemployment rate steady at 6.7 percent, which could ease investors’ fears the economy is slowing sharply.
Nonfarm payrolls are expected to have increased by 185,000 last month, according to Reuters’ poll of economists, after unseasonably cold weather in December limited gains to 74,000.
“The anticipated acceleration in job growth reflects in part the unwinding of the weather-induced weakness last month, and is consistent with other indicators which are pointing to continued positive momentum in the economy,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
The U.S. Labor Department will release its closely watched employment report on Friday at 8:30 a.m. (1330 GMT).
A report on Monday showing a surprise drop in factory activity to an eight-month low in January rattled investors and stoked fears of a significant cooling off in growth after the economy’s robust performance in the second half of 2013.
With frigid temperatures largely blamed for manufacturing’s weak performance, some economists warned that hiring would probably not bounce back by as much as many anticipated.
Extremely cold weather and severe winter storms descended on large parts of the country in January, disrupting activity in weather-sensitive sectors such as construction.
“While conditions improved for the survey week the rest of the month was quite cold,” said Michelle Meyer, an economist Bank of America Merrill Lynch in New York.
“In some sectors such as construction, builders may be hesitant to start new projects given harsh weather conditions, creating delays in the supply chain.”
The report will grab the attention of Federal Reserve officials, who appeared to shrug off December’s weak hiring when they announced further cuts to their monthly bond purchases at a meeting last month.
Some economists say a second straight month of weak hiring, even weather-related, could prompt the Fed to hold off on further reductions. Economic growth is expected to moderate a bit in the first quarter, after a spurt in the second half of last year that was driven by inventories, consumer spending and trade.
Economists estimate that cold weather reduced payrolls in December by between 50,000 and 100,000.
In its report on Friday, the government will publish revisions to data on payrolls, the workweek and earnings going back to 2009. Last year, it said 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.