"We look for nonfarm payroll job growth of 160,000 in January, about unchanged from 156,000 in the prior month and the 3-month moving average of 165,000. There have been some discussions in the news about a hiring freeze of federal workers, but this should have only a very minimal impact on the jobs report, as the average monthly gain in federal jobs over the past year was 3,000 and the freeze only went into effect January 22. The unemployment rate is likely to hold at 4.7%, which assumes little change in the labor force participation rate. However, there is certainly scope for changes in the labor force.

Given that the unemployment rate is already at or below most measures of full employment, there is a great deal of attention placed on the trend going forward. A further decline in the unemployment rate-even if prompted by a drop in the labor force participation rate-would strengthen the case for the Fed to hike rates, putting upward pressure on our forecast of 1 hike for this year".