SECURITY: Waltz Will "Drive Peace Home" At Meeting With Ukrainians Next Week

There are two seasonal considerations to be made with the upcoming payrolls report for January. 

• January has a particularly pronounced seasonal pattern with large layoffs following the festive period.
• There were average job losses approaching 3.0 million in each January through 2017-17 whilst it’s been closer to 2.7 million through 2021-24. A reluctance to fire staff amidst historically tight labor market conditions saw just 2.5 million net payroll declines in Jan 2023, driving strong seasonally adjusted payrolls growth, before a more typical 2.8m in Jan 2024. 

• Conditions are looser this time around but the apparent “low hire low fire” approach to employment should continue to help bolster seasonally adjusted payrolls growth for this month at least. 

   

• Latest data for January aside, we’ll be closely watching the revisions to the seasonal factors over the past five years. As things currently stand, months at the start of the year have been seen less favorable factors than they used to with payback from more favorable factors late in the year.
• The past three months have seen particularly favorable factors: our calculations show that by using the Dec’24 factor rather than Dec’23 factor (for example), it boosted seasonally adjusted nonfarm payrolls growth 56k higher in Dec and almost 100k in each of the Nov and Oct reports.
• Those three months coincided with a much stronger than expected December (256k vs cons 165k), an in-line Nov (194k vs cons 205k) and a sizeable miss for Oct (12k vs cons 100k).
• We don’t know how these factors will be revised but our bias is that risks are skewed to the downside for revisions to recent trends for seasonally adjusted payrolls growth. 

The government of French Prime Minister Francois Bayrou has survived a 'no confidence' vote, clearing the path for the government to adopt a 2025 budget. 

• The vote is in line with expectation, as MNI noted in an earlier bullet: FRANCE: Bayrou Gov't Safe In Today's Votes; Gov't Expects Budget Adopted Mid-Feb
• France24 noted ahead of the vote that although the National Assembly, Socialists, and National Rally declined to back the no-confidence motion, "it is unlikely to be the only challenge to [Bayrou's] shaky administration in the coming months."
• RN leader Jordan Bardella said that although, "it's a bad budget... we need a budget... We need to avoid uncertainty because many of our fellow citizens... are extremely worried about possible long-term instability."
• Socialist leader Olivier Faure said toppling the government over the budget would only have resulted in France having "a prime minister further to the right," adding: "We chose to give France a budget."
• Bloomberg notes: "Bayrou has now largely completed his two most pressing missions: adopting a budget and breaking the unity of the leftist New Popular Front alliance," but, "will still likely struggle to adopt new legislation in the coming months given the fragmented parliament and the diminished power of Macron’s coalition."

• US Data/Speaker Calendar (prior, estimate)
• 6-Feb 0730 Challenger Job Cuts YoY (11.4%, --)
• 6-Feb 0830 Initial Jobless Claims (207k, 213k)
• 6-Feb 0830 Continuing Claims (1.858M, 1.870M)
• 6-Feb 0830 Nonfarm Productivity (2.2%, 1.2%)
• 6-Feb 0830 Unit Labor Costs (0.8%, 3.4%)
• 6-Feb 1130 US Tsy $95B 4W & $90B 8W bill auctions
• 6-Feb 1430 Fed Gov Waller fireside chat (no text, Q&A)
• 6-Feb 1710 Dallas Fed Logan, future challenges for Mon-Pol