US: December payrolls and jobless rate fall short of expectations – UOB Group

US Employment Data for December Falls Short of Forecasts

The US Bureau of Labor Statistics (BLS) released its latest Employment Situation report last Friday, January 9th, revealing that job growth in December was weaker than anticipated, despite already modest expectations. According to UOB Group's Senior Economist Alvin Liew, the non-farm payrolls (NFP) increased by only 50,000 positions in December, falling short of the Bloomberg consensus estimate of 70,000.

Disappointing Payroll Numbers and Lower Unemployment

The December payroll figures delivered two notable disappointments: job gains were limited to just 50,000, missing forecasts, and previous months’ data was revised downward by an additional 76,000 jobs. The unemployment rate edged down to 4.4% from November’s 4.5%. On average, monthly job growth in 2025 has slowed to 49,000, a significant drop compared to the 168,000 average seen in 2024.

Sector Performance and Wage Trends

Both private and public sectors contributed to job creation, with the largest increases seen in healthcare, leisure, and financial activities. In contrast, industries such as manufacturing, construction, retail, warehousing and transportation, and professional services experienced job losses. Wages grew by 0.3% month-over-month and 3.8% year-over-year, slightly outpacing expectations and improving from November’s 0.2% monthly and 3.6% annual increases.

Implications for Monetary Policy

The December employment report reinforces expectations for additional interest rate cuts, though not in the immediate term. Analysts anticipate a pause in rate adjustments in early 2026, aligning with Chair Powell’s planned departure in May, followed by two rate reductions during the second and third quarters of the year.