Key US data coming up; nonfarm payrolls outcome? - Nomura

Analysts at Nomura explained that they expect the BLS to report a 205k increase in nonfarm payroll employment for January (Consensus: 180k), with 200k from private employers (Consensus: 181k) and a 5k contribution from the government. 

Key Quotes:

"We forecast a steady, 0.2% m-o-m increase in average hourly earnings (2.6% y-o-y) with a higher-than-usual amount of uncertainty due to tax bill-related pay increases and changes to various states’ minimum wage laws (Consensus: 0.2%). The momentum in the labor market, with consistent employment growth above that needed to absorb new labor market entrants, will likely bring the unemployment rate down 0.1pp to 4.0% (Consensus: 4.1%). 

Factory orders: Factory orders likely increased sharply in December. The advance estimate of durable goods orders by the Census Bureau posted a strong increase (+2.9% m-o-m), partly boosted by volatile transportation orders. Excluding transportation components, durable goods orders increased a decent 0.6% m-o-m. While containing positive data for shipments, orders for core capital goods (non-defense capital goods excluding aircrafts), a leading indicator of capital expenditures, were down 0.3% m-o-m for the first time since June. 

University of Michigan consumer sentiment: Consumer sentiment in the University of Michigan’s preliminary January survey declined somewhat, driven by a drop in the evaluation of current economic conditions by self-identified Democrats and Independents. However, part of this decline likely reflects the partisan interpretation of the recently passed Republican tax bill. Thus, as this sentiment fades, consumer sentiment will likely rebound, reflecting healthy job growth and income gains. Inflation expectations at both the one- and five-year horizons ticked up 0.1pp in the preliminary January survey, to 2.8% and 2.5%, respectively. Part of the pickup in shortterm inflation expectations may reflect rising gas prices. However the stabilization of longer-term expectations will be an encouraging sign for some FOMC participants who have recently expressed concern about the risks of declining long-term inflation expectations."