Published: 2026-01-08T16:00:23.000Z

Preview: Due January 9 - U.S. December Employment (Non-Farm Payrolls) - Slightly firmer with unchanged unemployment

16

We expect December’s non-farm payroll to rise by 75k both overall and in the private sector, up from 64k and 69k respectively in November. We expect unemployment to be unchanged at 4.6% and a modest 0.3% increase in average hourly earnings.

The labor market still looks subdued and Fed Chairman Powell suspects even the recent trend for moderate gains is overstating the true picture, but initial and continued claims have seen trend slip into early December, arguing for a slightly stronger payroll gain. Improved ADP data, which tends to underperform payrolls, and reduced layoffs in December data from Challenger, Gray and Christmas, is also supportive. The main area of improvement is likely to be leisure and hospitality, which was below trend at -12k in November.

The 6-month average for private sector payrolls was a modest 44k in October and November, the weakest since the declines caused by the pandemic. Our forecast would lift it to 61k in December, assuming no revisions. We do not ex[act any large payroll revisions this month.

Public sector employment plunged by 157k in October before a modest 5k decline in November. October’s plunge was due to DOGE layoffs coming through after having been kept on the payrolls for six months. It did not reflect the government shutdown, as government workers did receive their salaries, albeit late. We see no reason to expect a big move in government in December.

We expect labor force growth to exceed that of employment in December, but not by enough to lift the unemployment rate from 4.6%, though before rounding we expect a rate closer to 4.6% than November’s 4.56%. Reduced optimism on the labor market in the Consumer Confidence survey is consistent with higher unemployment. Annual historical revisions are due for unemployment this month. These are almost always marginal, but it makes the data before rounding harder to predict.

We expect a 0.3% rise in average hourly earnings, in line with trend, though before rounding a rise of 0.27% would hint at a continued modest loss of momentum. Yr/yr growth would however then correct higher to 3.6% from November’s 3.5%, which was the slowest since May 2021.

The workweek picked up to 34.3 hours in November after three straight months at 34.2. A dip back to 34.2 appears more likely than another 34.3. This would leave aggregate hours worked up by a modest 0.5% annualized in Q4, after a flat Q3.

4Cast Ltd. and all of its affiliates (Continuum Economics) do not conduct “investment research” as defined in the FCA Conduct of Business Sourcebook (COBS) section 12 nor do they provide “advice about securities” as defined in the Regulation of Investment Advisors by the U.S. SEC. Continuum Economics is not regulated by the SEC or by the FCA or by any other regulatory body. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Continuum Economics has an internal policy that prohibits “front-running” and that is designed to minimize the risk of receiving or misusing confidential or potentially material non-public information. The views and conclusions expressed here may be changed without notice. Continuum Economics, its partners and employees make no representation about the completeness or accuracy of the data, calculations, information or opinions contained in this report. This report may not be copied, redistributed or reproduced in part or whole without Continuum Economics’s express permission. Information contained in this report or relied upon in its construction may previously have been disclosed under a consulting agreement with one or more clients. The prices of securities referred to in the report may rise or fall and past performance and forecasts should not be treated as a reliable indicator of future performance or results. This report is not directed to you if Continuum Economics is barred from doing so in your jurisdiction. Nor is it an offer or solicitation to buy or sell securities or to enter into any investment transaction or use any investment service.
Analyst Declaration
I,Dave Sloan, the Senior Economist declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.