Weak U.S. Job Growth Continued But Unemployment Rate Unexpectedly Slipped Back to 4.4%
January 9, 2026
In a week full of data releases, the most eagerly awaited report from the get-go had been today’s U.S. December employment situation report from the Labor Department, which presented mixed results relative to market expectations but an overall soft picture. Non-farm payroll jobs climbed by a smaller-than-forecast 50 thousand, and revisions to the October and November initial estimates were revised down by a combined 76K, leaving the average monthly increase in 2025 at just 49K. Combining that historically very low pace for a non-recession in the first year of President Trump’s second tour of duty with the near-10 million loss of jobs during the pandemic-ridden final year of his first tour presents a pretty abysmal record for what amounts to half a single presidential term. Other highlights in today’s labor market data include
- An acceleration of year-on-year hourly average earnings growth to a 4-month high of 3.8% from 3.6% in November. 3.8% represents a deceleration of only 0.2 percentage points from 4.0% in December 2024.
- Jobs in retail and manufacturing respectively declined by 25k and 8k last month.
- The overall jobless rate dipped 0.1 percentage point to a 3-month low of 4.4% but was 0.6 percentage points above 3.8% at the end of 2024. U-6, which is the rate of un- and under-employment fell to 8.4% from 8.7% the month before but was a full percentage point above its level in December 2024.
- Labor market participation edged lower to 62.4%.
- While the Labor Dept. was releasing these figures, the Commerce Dept. reported October drops of 4.6% in housing starts and 0.2% in building permits. These were weaker than assumed.
Just prior to the Labor Department’s release, the dollar showed modest overnight gains led by rises of 0.5% against the Korean won and 0.4% versus the Japanese yen and included a 0.1% uptick versus the euro. U.S. stock futures at the time of the release showed modest gains and subsequently added to such especially in the case of the Russell 2000, now up a tad over 1%. The 10-year U.S. Treasury yield had been up a basis point and now shows a 3-basis point overnight advance. That’s more than the rise in 10-year European sovereign debt yields and even exceeds a 2-basis point rise in the Japanese JGB. Overnight commodity price rises at the time of the U.S. jobs data have been extended, too, and currently amount to 4.2% in silver, 1.2% in oil and 0.7% in gold. On the contrary, a drop in the price of Bitcoin has doubled to 1.0% since jobs announcement. In foreign stock markets, share prices closed little changed in Asia but now show gains of 1.2% in France, 0.6% in the U.K. and 0.5% in Germany.
Among other data reported around the world this Friday,
- Chinese consumer price inflation of 0.8% in December climbed to a 34-month high, but that combined with a 1.9% rate of producer price deflation in the world’s second largest economy.
- Retail sales volume in the euro area rose by 0.2% in November and posted their largest year-on-year advance (2.3%) since 2.6% in July. Among the largest economies in the euro zone, sales fell 0.6% in Germany but rise 1.0% in Spain, 0.5% in France and 0.3% in Italy. Sales increases from November of 2024 ranged from Germany’s 1.1% to Spain’s 6.1%.
- German industrial production in November rose 0.8% compared to both October and year-earlier levels. Those results were much better than predicted. Alternatively, Germany also reported its smallest trade surplus in 35 months during November of just EUR 13.1 billion, which compares to an average monthly surplus of EUR 16.9 billion during the first ten months of the year.
- Canadian labor market statistics for December underperformed expectations, trimming the perceived chances of a near-term Bank of Canada interest rate hike. Unemployment rebounded 0.3 percentage points, reversing most of November’s decline, and employment increased only 8.2k versus an increase averaging 60k per month in September-November. Average hourly earnings growth slowed to 3.7% from 4.0% in the prior two months.
- A 2.1% year-on-year advance in French industrial production during November was the most in 30 months. Likewise, Spain’s 4.5% year-on-year rise of industrial production was its biggest in 40 months.
- Brazilian consumer price inflation slowed 0.2 percentage points to a 16-month low of 4.3% in December.
- Norway experienced CPI and PPI inflation fo 3.1% and -11.4% (the most deflationary in 22 months) during December.
- Lithuanian CPI inflation dropped to a 7-month low of 3.4% in December from 4.3% in November and 24.1% at peak in September of 2022. Romanian producer price inflation fell back to 4.8% in November from 7.9% in October.
- Romanian GDP contracted 0.2% on quarter in 3Q 2025, breaking a streak of fourth straight expansions.
- Mexican industrial production rose 0.6% in November but was 0.8% lower than a year earlier.
The preliminary findings of the U. Michigan monthly survey of U.S. consumers revealed a higher-than-expected 5-month peak in confidence, but the 55.0 readout remained in depressed territory. A record-tying low of 47.3 had been touched earlier this year and shortly after “Liberation Day”, which compared to readings of 76.9 in November 2024 and 93.5 in May 2019.
Copyright 2025, Larry Greenberg. All rights reserved.
Tags: Euroland retail sales, French and German industrial production, U.S. December jobs report
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