The most important number in Friday’s jobs report

You won’t have to dig too deep into January’s jobs report to ferret out the most important number when the data is released Friday. In fact, I basically just told you what it is.

This month, it’s all about how many jobs were created. Seems sort of obvious, except for the fact that the government’s numbers on hiring and unemployment have been acting in odd ways lately. December was particularly weird. The economy created only 74,000 jobs that month -- less than half the average pace of job growth during the rest of the year. Meanwhile, the unemployment rate dropped from 7 percent to 6.7 percent -- but much of that was due to people leaving the labor force rather than finding work.

Economists have been brushing off December’s weak job growth as an aberration. They’ve blamed it on bad weather, which hurts job creation for certain industries such as construction. They’ve pointed out that the estimate was the government’s first crack at the data, and it could be revised upward on Friday. And they’ve noted that other economic data show the recovery has actually picked up momentum: GDP grew at the fastest pace in a decade during the second half of last year.

All eyes will be on the January payroll number to bolster those arguments. Analysts expect the data will show the economy added about 190,000 jobs in January, back in line with previous performance. If the number disappoints once again -- and especially if the miss is as dramatic as in December -- it will take some fancy footwork to keep the economy-is-just-fine storyline alive. (Though the weather may play the villain once again.)

But let’s be optimistic for now and assume that the jobs number does meet forecasts. After breathing a sigh of relief, analysts will then turn their attention to the unemployment rate. Specifically, they’ll be looking to see whether it has fallen to 6.5 percent, or how quickly it might get there. That threshold is important because the Federal Reserve has promised to keep its benchmark interest rate near zero at least until the jobless rate hits 6.5 percent.

So if the nation reaches that mark on Friday, the Fed will likely have some explaining to do at its next meeting in March. The central bank has already tried to soften its stance by saying that it will likely keep rates low “well past” the time the threshold is met. But you can bet markets will be in a tizzy until the Fed provides more clarity.

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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