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2026-01-09 18:36:24
[Non-Farm Payrolls Preview: Citi Expects Weak Job Growth and Rising Unemployment Rate, Potentially Strengthening the Fed's Reasons for Rate Cuts] ⑴ Citi expects the US December non-farm payrolls report, to be released tonight, to deliver a mixed signal: moderate job growth, but the unemployment rate may rise further, reinforcing signs of a weak labor market. ⑵ Specific forecasts indicate that non-farm payrolls are expected to increase by approximately 75,000, with a risk of rising to 150,000. However, the bank warns that a stronger reading is more likely to reflect seasonal distortions than a genuine recovery in hiring activity. ⑶ The unemployment rate is expected to rise to 4.7% from 4.6% in November. Citi believes that even if the unemployment rate remains at 4.6%, it will be an important signal that the November data was not abnormally distorted by the government shutdown. ⑷ The bank considers the change in the unemployment rate to be the most critical detail in the report, indicating that while the labor force participation rate is rising, labor demand is softening. At the same time, wage growth is also expected to slow. (5) Citigroup analysis points out that if the unemployment rate rises to 4.7%, it will be significantly higher than the 4.4% level at the Fed's December meeting, which could provide a reason for another rate cut in January. The bank continues to expect 75 basis points of rate cut space in 2026. (6) Although non-farm payrolls may appear resilient, Citigroup emphasizes that, after seasonal adjustments, job growth is likely to be lower than the "break-even" pace needed to maintain a stable unemployment rate. The final data for 2025 should confirm the gradually weakening trend in the labor market, and the downside risks to the labor market have increased since the Fed's December meeting.
