02:55 PM EST, 02/03/2025 (MT Newswires) -- January payrolls could be hit by an estimated 40,000 fall due to the California wildfires, while cold weather and a new strike are expected to further contribute to a month-over-month growth deceleration, Morgan Stanley said in a note emailed Monday.

Morgan Stanley predicts total nonfarm payrolls to have increased by 140,000 last month, which would mark a deceleration from the 256,000 gain the Bureau of Labor Statistics reported for December. The consensus is indicating a 154,000 increase in January payrolls, according to Bloomberg.

Morgan Stanley Chief US Economist Michael Gapen are estimating a 40,000-payroll hit from the California wildfires, a 30,000 impact from cold weather and a dent of 5,000 related to the Oregon Nurses Association strike.

The Palisades and Eaton wildfires that began on Jan. 7 have affected roughly 37,500 acres and destroyed about 16,000 structures, according to Morgan Stanley. Temperatures fell in the second week of January after an unusually warm November and December.

An underlying trend of marginally accelerating payrolls and some delayed post-hurricane improvements are expected to counter those impacts, the research report showed.

Wages will likely show continued moderation, while the unemployment rate will probably hold steady at 4.1%, Gapen said. The BLS' January nonfarm payrolls report is due on Friday.

Labor market indicators "have not suggested a sharp change in the trend," according to Gapen. "New initial jobless claims have moved sideways despite a rise in claims in California, but continuing claims have risen in total and in California since December," he said.

The claims data imply no faster layoffs, but some increased difficulty finding reemployment in California, which is a "normal feature of isolated natural disasters and anomalous weather," according to Gapen.