US: Downside surprises in December payrolls and unemployment rate – UOB Group

The latest US Employment Situation report by the Bureau of Labor Statistics (BLS) last Fri (9 Jan) presented two main downside surprises as jobs growth in December missed expectations even though the bar was set low while unemployment rate also dipped below expectations. The non-farm payrolls (NFP) came in at a modest 50,000 in December (below the Bloomberg median estimate 70,000), UOB Group's FX analysts Senior Economist Alvin Liew reports.

US payrolls miss expectations in December

"Dec payroll report provided two downside surprises as US reported just 50,000 jobs gained (well missing Bloomberg median estimate of 70,000) while prior month revisions saw a further 76,000 declines. Unemployment rate expectedly eased to 4.4% (Nov: 4.5%), while employment growth averaged 49,000 monthly in 2025, versus 2024’s 168,000."

"Job creation was driven by both private and public sectors. Key sources of gains were healthcare, leisure, and financial activity while manufacturing, construction, retail trade, warehousing & transportation, and professional services lost jobs. Wage growth rose by 0.3% m/m, 3.8% y/y, slightly faster than expected and from 0.2% m/m, 3.6% y/y in Nov."

"The Dec jobs report maintained the bias towards further rate cuts but not necessarily for the immediate future. We expect a period of pause in early 2026 to coincide with Powell’s scheduled departure as Chair in May, and two rate reductions in 2Q and 3Q."