We are forecasting a total gain of 100,000 jobs for December, in contrast with the consensus of 60,000, and an increase in the unemployment rate to 4.5% when the U.S. jobs report is released on Friday.
We also anticipate that average hourly earnings will increase by 0.2% on the month, which should translate to 3.5% growth from one year ago.
As with any December payroll estimate, seasonal noise will play a major role, so we would suggest that any upside surprise on the top line be tempered with the understanding that outside of seasonal demand hiring will remain tepid.
The government shutdown will also continue to have an impact on the data. Since the shutdown lingered deep into the fourth quarter, reducing gross domestic product toward 1%, hiring likely remained soft.
We expect that the demand for workers in health care and education will remain solid, which will help drive the top-line number, in addition to gains in retail and transportation, with residual weakness elsewhere.
In addition, once one moves away from seasonal hiring and focuses on areas like manufacturing, we expect the recent trend in labor force reductions to be sustained and other areas across the economy to remain weak.
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We expect a notable downward revision to overall hiring in 2025 when the benchmark revision is posted this year.
We are also among those concerned about the decoupling of hiring from an economy that is likely to post above-trend growth near 2.3% or higher this year on the back of expansionary fiscal policies.
The United States has experienced jobless expansions in 1954, 1961, 1991 and 2001, so a period of soft hiring amid a solid economic expansion is not without precedent.
Labor market growth and economic expansions do not always proceed simultaneously.
Yet open talk from chief executives about cutting down on hiring until the impact of artificial intelligence can be better understood suggests that a possible broader structural shift is occurring across a complex $30 trillion economy.
This shift is likely to be one of the major narratives that drives inquiry into the American labor market and society in 2026 and beyond.
