Don’t be surprised if Friday’s jobs report shows that February’s employment gains were far below those reported for January.

Economists expect that US employers added 200,000 jobs last month, according to FactSet estimates. Such a tally pales in comparison to January’s whopping 353,000 job gains.

But February’s estimated monthly total would still be nothing to scoff at. In fact, it would continue a history-making stretch of labor market expansion. Additionally, January’s seemingly jaw-dropping job gains came with their fair share of caveats (namely the influence of weather, annual seasonal adjustment factors and because fewer seasonal workers were likely laid off than in previous Januarys).

Friday’s jobs report could very well provide a more reliable read on what’s actually happening in the labor market than the jobs reports of recent months’ past, Julia Pollak, chief economist at ZipRecruiter, told CNN.

October’s and November’s reports had some bumpiness because of striking and returning autoworkers, writers and actors. December and, especially, January likely overstated growth.

“And so, February might give us a better understanding of the underlying rate of job growth,” she said.

The labor market is expected to cool further in 2024 from last year, when monthly gains averaged 254,667 jobs and from the roaring post-pandemic recovery years of 2022 and 2021, when job growth averaged 377,333 and 603,750 per month, respectively, Bureau of Labor Statistics data shows.

Even so, the projected employment gains for February would be well above historical averages and the neutral rate of job growth needed to keep up with population growth (estimated between 70,000 to 100,000 jobs).

Plus, if the job gains come in as expected and unemployment stays steady at 3.7%, it would continue what’s been the fifth-longest labor market expansion on record and continue a streak of sub-4% unemployment that hasn’t been seen since Nixon was in office.

“Compared to 2021 and 2022, the party has ended, and now people are feeling the hangover,” Ron Hetrick, senior economist for labor analytics firm Lightcast, said Wednesday in a statement. “People think things are terrible now, but looking at the economy as a whole, we’re not seeing that in the data — things are fantastic, but we lost track of what ‘fantastic’ was when we experienced something completely unrealistic in ‘21 and ‘22.”

What to watch in Friday’s report

Beyond the headline numbers, there are plenty of metrics to watch in Friday’s report. Here are a few:

Wage growth: Average hourly earnings sharply rose in January, jumping 0.6% from December and climbing to 4.5% annually, amid a drop in hours worked (more on that later). Economists expect the pace of wage growth to moderate slightly, but not slow enough for the Federal Reserve’s liking.

Central bankers are likely looking for annual wage growth to be in the 3.5% realm, Gus Faucher, PNC Financial Services’ chief economist, told CNN.

Other data shows that wage growth is moderating. Payroll processor ADP reported Wednesday that “job-stayers” saw annual pay gains slow to 5.1% in February.

Additionally, the BLS’ latest job turnover data released Wednesday showed the quits rate (the number of people quitting their jobs as a percentage of total employment) dipped to 2.1% in January, the lowest since April 2020. Higher quit rates typically correlate to higher wage and price inflation pressures.

Average workweek: The BLS’ measure of average hours worked in a week typically holds steady or moves by only 0.1 hours on a monthly basis. However, in January, the metric dropped by 0.2 to 34.1 hours, landing at the lowest level since March 2020.

The decrease, which contributed to the boost in the average hourly earnings data point, was likely due to the frigid temperatures and snow in January that affected work in weather-sensitive industries, Faucher said.

However, if average weekly hours do shrink more, it could be a sign that economic activity is weakening.

“Oftentimes when businesses see softer demand, the first thing they’ll do is they’ll cut back on hours, because they don’t want to have to lay people off,” he said. “If we see a bounce-back in hours worked, that would be an indication that labor demand is still pretty solid.”

Where the jobs are and labor force participation: For much of the past year, the lion’s share of employment gains were concentrated in only three sectors: health care, leisure and hospitality, and government. January’s jobs report showed that the gains were in a wider swath of industries (including key industries such as construction and manufacturing), so economists are looking to see if that was a statistical blip.

The labor force participation rate, which is an estimation of the active workforce and people looking for work, was unchanged in January at 62.5%.

Labor force participation rates have been on a decline — largely due to demographic changes and aging Baby Boomers — since hitting a high of 67.3% in early 2000, and had fallen to 63.3% in the month before the onset of the pandemic. The participation rate has not returned to pre-pandemic levels, vexing economists and the Fed, while also contributing to an imbalance of worker supply and demand.

What the other labor market data is showing

Other economic data released this week reinforces the idea that the US labor market is cooling but remains on solid footing.

Private-sector US employers added an estimated 140,000 jobs in February, ADP reported Wednesday. Last month’s total landed slightly below economists’ expectations for a net gain of 150,000 jobs but above ADP’s January tally, which was upwardly revised to 111,000 hires.

“The economy still seems to be chugging along, and hiring is keeping up that pace,” Nela Richardson, ADP’s chief economist, said during a call with reporters on Wednesday.

The Job Openings and Labor Turnover Survey (JOLTS) for January showed that job openings, hiring activity, quits and layoffs all moved downward. Still, the number of job openings — a closely watched measure of labor demand — remains well above pre-pandemic averages, highlighting the continued strength of the labor market. In January, there were an estimated 8.86 million available jobs, down from the upwardly revised 8.89 million in December.

Layoff announcements, by some measures, remain elevated.

In February, US-based companies announced 84,638 job cuts, a 3% increase from January and up 9% from February 2023, according to data released Thursday by outplacement and executive coaching firm Challenger, Gray & Christmas.

While the January-February tally is running about 8% below what was seen during the first two months of last year, Challenger noted that it’s the second-highest January-to-February total since 2009.

“As we navigate the start of 2024, we’re witnessing a persistent wave of layoffs,” Andrew Challenger, the firm’s senior vice president, said in a statement. “Businesses are aggressively slashing costs and embracing technological innovations, actions that are significantly reshaping staffing needs.”

Reports of localized layoffs show some “pockets of weakness” in the labor market, Lydia Boussour, EY senior economist, wrote in commentary issued Tuesday.

“Still, real-time data such as initial and continued jobless claims indicate that layoff activity remains low across the economy,” she noted.

New data released Thursday showed that first-time claims made last week for unemployment benefits were unchanged from the week before at 217,000. In the decade before the pandemic, weekly claims for unemployment benefits averaged 311,000, Labor Department data shows.

Thursday’s report also showed that continuing claims, which are filed by people who have received unemployment benefits for one week or more, were 1.906 million for the week that ended on February 24, an increase of 8,000 claims from the prior week’s level that was revised down by 7,000.

Continuing claims, which could give an indication of how easy it is for unemployed workers to find jobs, are at their highest level since mid-November 2023.