Data released by the U.S. Bureau of Labor Statistics on Friday (January 9) showed that the U.S. added 50,000 jobs in December, below economists' forecasts of 60,000. The unemployment rate fell to 4.4%, compared with 4.6% in November. This data provides the most complete picture of the U.S. job market in months, after the November and October data were severely affected by the government shutdown. The November job increase figure was revised down to 56,000 from an initial estimate of 64,000.



This data release further confirms signs of a deteriorating labor market, impacted by federal government workforce cuts and a slowdown in private sector hiring. The Federal Reserve has lowered its benchmark interest rate target range at 3.5-3.75% at its last three meetings, maintaining it at a three-year low. Fed Chair Powell hinted in December that the threshold for further rate cuts was high, stating that current borrowing costs were "in a good place." However, the weak December data may complicate the Fed's case for pausing its rate-cutting cycle at its next meeting later this month. The Fed also expressed concerns about the accuracy of recent Bureau of Labor Statistics data, with Powell suggesting that the U.S. economy is adding 60,000 fewer jobs per month than the employment report claims.

The decline in the U.S. unemployment rate has dashed the Federal Reserve's plans to cut interest rates in January, and interest rate swap contracts currently consider the probability of this happening to be zero.

Institutional Views

Institutional analyst Anstey commented on the US non-farm payrolls: Private sector employment data was weak, with only 37,000 new jobs added in December. Notably, manufacturing employment declined again.

Lindsay Rosenner, Head of Multi-Sector Fixed Income at Goldman Sachs Asset Management , comments on the US non-farm payrolls: Goodbye, January! The Fed is likely to maintain the status quo for now, as the labor market has shown initial signs of stabilization. The improvement in the unemployment rate suggests that the sharp rise in November was due to individual employees leaving early due to the "deferred departure" policy and data distortion, rather than a sign of systemic weakness. We expect the Fed to maintain its policy stance for now, but anticipate two more rate cuts in the remainder of 2026.