Nonfarm payrolls forecast increasing 170,000 in December
Unemployment rate expected to rise to 3.8 from 3.7
Average hourly earnings seen gaining 0.3; up 3.9 yy

WASHINGTON, Jan 5 Reuters U.S. job growth likely moderated in December, while the increase in annual wages probably slowed to below 4 for the first time in 212 years, potentially drawing the Federal Reserve a step closer to start cutting interest rates.

The closely watched employment report from the Labor Department on Friday is also expected to show the unemployment rate edging up to 3.8 last month from 3.7 in November. Easing labor market conditions would add to data last month showing inflation ebbing significantly in November and could cement financial market expectations for a rate cut in March.

The report would also indicate that the economy avoided a recession last year and would likely continue to grow through 2024 as labor market resilience supports consumer spending.

Right now, employers are hiring to keep the doors open, rather than to expand, but they39;re also not letting workers go, said Elizabeth Crofoot, a senior economist at Lightcast in Washington. That39;s close to the 39;Goldilocks39; job market that the Fed has been trying to achieve.

Nonfarm payrolls likely increased by 170,000 jobs last month after rising 199,000 in November, according to a Reuters survey of economists. Baring any revisions to October and November39;s payrolls counts, this would mean the economy added roughly 2.722…