CITI: Friday's Jobs Report Will Be All Messed Up

All eyes are already on the January jobs report, which will be released this Friday.

But Peter D'Antonio at Citi is warning that a slew of "special factors" make this particular employment report difficult to forecast.

In other words, there's a higher probability that the report will beat or miss expectations by a wide margin. And either way, it might not matter since it won't reflect the core health of the labor market.

Here are some of the special factors that D'Antonio identified:

• Extreme cold in December - The extreme cold and stormy weather saw "an exceptionally low" December payrolls figure which hit construction and leisure industries. This could benefit January because weather related-weakness is usually fully reversed the following month. Then again, January was also exceptionally cold which could limit a "bounce back."
• Massive surge in November - Another factor that could limit a bounce back is the fact that November saw a surge in jobs. This could explain some of the weakness in December. So rather than see December jobs pushed into January, we may have actually already seen them pulled into November.
• Seasonal retail hiring - The run-up in retail hiring, which occurs around the holidays, is likely over. However, this adds noise to the numbers around this time of year.
• Labor force correction - The labor force participation rate has dropped sharply, falling 0.7 percentage point in the past six months. "We think there could be a correction in the labor force that would naturally elevate the unemployment rate slightly."
• Emergency unemployment benefits - The January 1 expiration of federal emergency unemployment benefits, and this could see the unemployment rate fall "to the extent that people who lost their benefits either found jobs or left the workforce."

D'Antonio also thinks any gain in income will be offset by unemployment benefits. He expects the economy to add 180,000 jobs in January, and for the unemployment rate to stay at 6.7%.