NEW YORK, Jan 9 (Reuters) - U.S. job growth slowed more than expected in December amid business caution about hiring because of import tariffs and rising artificial intelligence investment, but the unemployment rate dipped to 4.4%, supporting expectations the Federal Reserve would leave interest rates unchanged this month.
Nonfarm payrolls increased by 50,000 jobs last month after rising by a downwardly revised 56,000 in November, the Labor Department's Bureau of Labor Statistics said on Friday. Economists
polled by Reuters had forecast 60,000 jobs added after a previously reported 64,000 increase in November.
MARKET REACTION:
STOCKS: U.S. stock futures rose further after the jobs data.
BONDS: U.S. Treasury yields briefly extended their rise, before paring them. The yield on benchmark 10-year notes was last flat at 4.177%FOREX: The dollar index trimmed gains after the data, and last up 0.1% at 98.984.
COMMENTS:
ADAM SARHAN, CHIEF EXECUTIVE, 50 PARK INVESTMENTS, NEW YORK:
"U.S. payrolls came in less than expected in December and the participation rate also fell and the overall labor force is contracting. So part of the reason for the drop in unemployment could be the unemployed people leaving the workforce... they just gave up, they stopped looking for jobs."
"So the three-months non-farm payrolls is now negative 22,000 and that's a concern. The good news there is that it gives the Fed the ability to cut rates, so that could be potentially bullish."
"To me, we now know that the jobs report is getting weaker and this was the fourth quarter, this was a busy holiday season. So the question then becomes, what does this mean for earnings. So the market is going to be looking forward to what's going to happen with interest rates and earnings."
LINDSAY ROSNER, HEAD OF MULTI SECTOR FIXED INCOME, GOLDMAN SACHS ASSET MANAGEMENT, NEW YORK: (from an email)
"Goodbye, January! The Fed will likely hold course for now with the labor market showing tentative signs of stabilizing. The unemployment rate improved suggesting November's jump was down to one-off DOGE-deferred resignations and data distortions rather than a sign of systemic weakness. We expect the Fed to remain on hold for now, but still pencil in two cuts for the rest of 2026."
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:
"50,000 jobs is less than consensus, but more than I was looking for."
"It's an employment report that's not too hot, not too cold, doesn't really change the prospects of the labor market in a big way."
"I'm a little disappointed with the hourly wage growth coming in at 0.3%. I thought it would be a little bit lower."
"Bottom line, I think it's a report that will satisfy the markets. I don't see this news putting too much upward pressure on yields from these levels, and it should mean that the Fed will continue to eye the labor market before cutting rates in the first quarter."
"The average (monthly payroll growth) is probably going to be closer to maybe 30,000 in the quarter, and that should give ample room for the Fed to cut. I'm not sure they'll cut in January. That might be put off. But in the first quarter, I think we're looking at a rate cut."
TODD SCHOENBERGER, CHIEF INVESTMENT OFFICER, CROSSCHECK MANAGEMENT, WASHINGTON:"The December jobs report provides the exclamation point to what was a full year of uncertainty and job insecurity. Unfortunately, the crumbling labor market is likely going to invite the recession narrative into Wall Street conversations."
"In a twisted way, though, today's data should provide clear evidence to support another rate cut when the Committee meets in a few weeks. The knee-jerk bullish reaction in stocks will be the right reaction as traders will view Fed policy decisions as being the octane to support higher highs in the markets."
JERRY TEMPELMAN, VICE PRESIDENT OF FIXED INCOME RESEARCH, MUTUAL OF AMERICA CAPITAL MANAGEMENT, NEW YORK:
"Today's jobs report provides one of the most insightful looks at the labor market economists have had in three months due to data disruptions stemming from the prolonged government shutdown. We're keeping an eye on elevated unemployment – which hit a four-year high in November's jobs report – and how it might affect the Federal Reserve's meeting at the end of the month. A soft labor market backdrop validated interest rate reductions in late 2025, but is not causing concerns that would substantiate further cuts this month."
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN:
"It's nice to see that it's not just health care that's adding jobs. Seeing the manufacturing workweek dip a bit is a red flag. That tends to be a leading indicator."
"Aggregate weekly hours fell, which is also a little disconcerting. Productivity is output per hour, so productivity can rise due to stronger output or lower hours. It would be nice if both were trending higher to thread the needle of faster growth with lower inflation."
"December may have marked a turning point for the labor market where it starts to get some traction, but that assessment is still very tentative."
(Compiled by the Global Finance & Markets Breaking News)
