Investors will be glued to their screens—with big tech earnings reports and the US jobs report out on Friday. In this sea of numbers, what should investors be looking for? Lakshman Achuthan, Economic Cycle Research Institute Co-Founder joins Yahoo Finance Live to weigh in on the key data investors should consider.

Achuthan believes that the Purchasing Manager’s Index and the January jobs report will be the two reports that investors should keep a close eye on. Achuthan believes that the jobs report will provide the “flavor” of the labor market at the moment.

Achuthan believes the Federal Reserve will be looking closely at the jobs report—specifically areas such as weekly hours worked and the “shift” from full-time roles to more part-time and temporary roles. Education and health are two sectors that Achuthan is hopeful about, noting these industries are “a solid anchor underneath of jobs growth.”

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

BRAD SMITH: Stocks muted this morning as investors brace for a big week ahead, including January jobs numbers and the latest rate decision from the Fed. Let's bring in Lakshman Achuthan who is the Economic Cycle Research Institute co-founder to discuss what you should be keeping an eye on. Great to have you here.

LAKSHMAN ACHUTHAN: Thank you.

BRAD SMITH: Back with us in studio here. So of the top things investors should be watching over the course of this week, what is the key economic data point that is perhaps going to tip the scale one way or the other?

LAKSHMAN ACHUTHAN: Right. For macro data, it has to be the PMIs. So these are surveys of managers, what are you up to? What are you feeling?

BRAD SMITH: That's not the sexiest data point to call out, by the way. Let's just put that out there.

LAKSHMAN ACHUTHAN: Purchasing managers. And then the jobs report. That's the big one at the end of the week to get the tone, the flavor of where are we in the jobs report. Where there's been headline jobs growth for a long time, an amazing amount of time, it has been slowing since '22. And that's a very clear downtrend in the headline growth. And underneath, there's some things that are looking a little weak. So that's a close one to watch.

SEANA SMITH: What's looking, more specifically, a little bit weak in terms of the underlying data because we focus so much on those headline numbers there. What are some of the trends that you've noticed? And then how do you think the Fed is going to view what seems to be the most likely case at least consensus right now that maybe jobs are going to cool just a bit, but it's still overall going to remain pretty resilient.

LAKSHMAN ACHUTHAN: Yeah. So let me unpack that. I'll give you the good and the bad. Which do you want first?

SEANA SMITH: Give us the bad, and then we'll take the good.

LAKSHMAN ACHUTHAN: And then we'll end with the good.

SEANA SMITH: Yeah.

LAKSHMAN ACHUTHAN: OK. So on the bad, weekly hours. So a lot of people are hired, but their hours are going down. And they've declined in a way that you typically see around a recession. So this is a situation of employers feeling the demand softer but not wanting to let people go, so they adjust the hours. Then we look at things like the kinds of jobs. There's a lot more part time jobs than full time jobs.

And that's been a pretty clear shift. Again, you see managers keeping people employed but keeping a lot of variability in how they are employed. And then a leading indicator of employment, one that makes a lot of sense is temporary employment. Is it strong or is it weak? And that's down 10%. The level has fallen 10%. Again, that's pretty much recessionary.

So that's the bad. I'll give you the good. Education and health, these two big sectors of our economy and government to a degree really steady as you go. Strong jobs growth in 2023. I think we got 4% jobs growth in education and health. So really, really solid anchor underneath jobs growth. And then, of course, the amount of people who are out there, there's still some tightness in the labor market, a lot of backwash from immigration going down, legal immigration and people moving around after COVID.