This is the non-agricultural data that the market most wants to see? Unemployment rate down + slightly lower than expected employment, strengthening the narrative of a "soft landing" for the US economy.

The December increase in non-farm payroll employment in the United States was slightly lower than the unanimous expectation of economists, indicating a slight warming trend in the US labor market at the end of the year and strong evidence that the US job market is not rapidly deteriorating as some economists had predicted. Following the announcement of moderate non-farm employment numbers and an unexpected decline in the unemployment rate, S&P 500 stock index futures rose, highlighting market acceptance of the soft landing logic and indicating that expectations of interest rate cuts have not been suppressed. Data released by the US Bureau of Labor Statistics on Friday showed that after significant downward revisions to employment data in the previous two months (with October showing a decrease of over 100,000 jobs), non-farm payrolls increased by a modest 50,000 in the previous month, just slightly below the widely expected increase of 60,000 jobs. The unemployment rate unexpectedly showed a positive trend, decreasing marginally from a revised 4.5% in November to 4.4%, following the record-breaking end of the federal government shutdown, better than the unanimous expectation of a 4.5% unemployment rate among economists, reflecting a significant reduction in the number of people directly unemployed. This December non-farm employment data resembles a "slow-growth but not out of control" employment landscape, interpreted by the market as extremely favorable for the narrative of a "soft landing" for the US economy. This data reinforces the "Goldilocks"-style soft landing narrative, with the unemployment rate unexpectedly falling to 4.4%, making it easier for the market to classify it as a labor market slowdown of "no hire, no fire" type, rather than accelerating deterioration towards a recession. Therefore, this combination of moderate job growth and declining unemployment rate typically means that the US economy is likely to experience a soft landing, with inflation pressures unlikely to be reignited by employment, making it more easily interpreted as "friendly to stock market and Fed rate cut expectations," while adding strength to the narrative of a soft landing for the US economy. The so-called "Goldilocks" style American macroeconomic environment refers to an economy that is neither too hot nor too cold, maintaining moderate GDP and consumer spending growth and a long-term stable trend of "moderate inflation," while benchmark interest rates remain on a downward trajectory. Goldman Sachs and Morgan Stanley have both emphasized in their latest reports on the US economy that they expect the US economy to gradually emerge from a highly uncertain state by 2026, returning to a positive trajectory of "moderate growth." Overall, the December non-farm payroll data can be said to be just right and the most anticipated data by the market. It is able to reflect that the US economy still has significant resilience, and there are no negative disturbances to the expectation of a soft landing for the US economy, while also not causing a shift in market expectations for Fed rate cuts with rate futures traders still pricing in the likelihood of two to three rate cuts by the Fed in 2026, higher than the median expectation of just one rate cut shown in the FOMC dot plot. Tom Essaye, founder and president of Sevens Report Research, said, "Like the previous two jobs reports, a 'good number' that shows healthy job growth while maintaining a stable unemployment rate is the best scenario for the stock market, and the most favored number to keep the current rally going." Lindsay Rosner, head of multi-industry fixed income investments at Goldman Sachs Asset Management, believes that the Fed is likely to maintain the status quo, as there are initial signs of stability in the labor market. The improvement in the unemployment rate indicates that the significant increase in November was only due to individual employees leaving early due to federal policies and data distortions, rather than a sign of systemic weakness. "We expect the Fed to maintain its current policy stance, but we also expect two more rate cuts in the remaining time of 2026." Before the non-farm payroll and unemployment rate data were released, a report by J.P. Morgan showed that the range for non-farm employment data was between 35,000 and 75,000: the probability of this positively impacting the stock market was 40%, and the S&P 500 index was expected to rise by 0.25% to 0.75% as a result. The US labor market shows a moderate warming trend on the eve of 2026 This data brings an end to a year of gradual cooling in the US labor market, which prompted the Fed to announce three consecutive rate cuts in the final stage of 2025, while also highlighting a positive growth momentum in the US labor market as the new year begins, undoubtedly good news for the economic growth prospects of the US in 2026. Despite being one of the weakest years for hiring in the US since 2009, US employers have largely managed to avoid large-scale layoffs. In the US market, a variety of employment market statistics for December show that after a noticeable slowdown in hiring in 2025, the US labor market still has some growth momentum as it enters the new year, with these data significantly reinforcing the narrative of a soft landing, presenting a combination of "easing of layoffs and a rebound in hiring intentions," which largely fits the employment picture required for an economic soft landing trajectory of "slowing growth but not stalling." According to data from Challenger, Gray & Christmas Inc., a US job placement agency (i.e., US Challenger company layoffs), the number of job cuts announced by US companies decreased last month, while plans for hiring were increased. Challenger's data shows that US companies announced the cutting of 35,553 jobs in December, unexpectedly reaching the lowest level since July 2024 and significantly lower than the high levels of job cuts in the previous two months. Additionally, the survey data shows that US employers plan to add nearly 10,500 jobs, well exceeding market expectations and reaching the highest level for any December since 2022. Data released by the US government on Thursday showed that labor productivity in the US accelerated to the strongest pace in two years in the third quarter, further indicating that the efficiency gains driven by the emergence of ChatGPT are significantly curbing inflationary pressures from wages. Meanwhile, as of the week ending January 3 (including the New Year holiday), the number of initial claims for unemployment benefits in the US increased by 8,000 from the previous week to reach 208,000, slightly lower than the market's general expectation of 210,000 and still well below the average level of initial unemployment claims from last year, reinforcing signs of a warming labor market. According to ADP Research data (i.e., "small non-farm"), which also suggests that the job market may have gained some moderate expansion momentum at the end of the year, US companies added 41,000 jobs in December, following a significant downturn in the previous month. An indicator of hiring in the service sector expanded to its strongest level since February last month. Federal Reserve officials will convene another monetary policy meeting later this month, and there is no doubt that officials are divided on how much interest rates should be cut this year. Following the release of the report, interest rate futures traders are still maintaining expectations of the Fed staying put at the January meeting, while S&P 500 stock index futures are maintaining an upward trajectory due to stable expectations for rate cuts and an intensifying narrative of a soft landing for the US economy. Detailed data from the US labor market for December showed that the increase in non-farm payroll employment was driven primarily by the leisure and hospitality industry as well as the healthcare sector, which were the absolute main drivers of new job creation in the US last year. Private sector employment in the US increased by 37,000 in December, only a small fraction of the same month a year ago. Employment in retail trade, construction, and manufacturing industries declined. Following the impact of the prolonged federal government shutdown and delayed resignations of federal employees on the data for the previous two months, this non-farm employment report now more clearly shows a potential trend of moderate recovery in hiring. Goldman Sachs and Morgan Stanley anticipate that the "soft landing trajectory" they envision will come to fruition in 2026 Overall, a series of labor market data for December shows that US companies experienced a slight increase in hiring pace in December, indicating that as the US economy enters 2026, it still remains resilient, laying a strong foundation for a complete soft landing for the US economy according to major Wall Street financial giants such as Goldman Sachs and Morgan Stanley, the macro story of a soft landing for the US economy is expected to significantly heat up in 2026 that is to say, the US economy is expected to grow faster than market expectations in 2026. In a recent report, Goldman Sachs stated that the strong growth resilience of the US economy in 2025 is expected to continue strongly after the calendar turns to 2026, as the tax cut provisions and more favorable loose financial conditions in the "big and beautiful" legislation led by the Trump administration, combined with the significant easing of headwinds from tariffs and inflation, will make the trajectory of a soft landing for the US economy a reality in 2026. Led by chief economist Jan Hatzius, the Goldman Sachs economic research team wrote in their 2026 global economic outlook report that the US economy is expected to grow at a stronger pace in 2026, with the institution predicting a real GDP growth rate of around 2.6%, higher than the 2% growth rate shown in the consensus expectations of Bloomberg economists. This follows a trend among Goldman Sachs economists to be more optimistic about the US economy compared to the consensus expectations after the COVID-19 pandemic. Both Goldman Sachs and Morgan Stanley define 2026 as the "year of embracing risk," where a rare combination of fiscal stimulus, monetary stimulus, and relaxed regulation the "trilogy" of policies resonates with an unprecedented AI investment cycle, driving strong profit growth for US companies and a stronger economic growth for the US. Overall, a series of labor market data for December shows that US companies experienced a slight increase in hiring pace in December, indicating that as the US economy enters 2026, it still remains resilient, laying a strong foundation for a complete soft landing for the US economy. According to major Wall Street financial giants such as Goldman Sachs and Morgan Stanley, the macro story of a soft landing for the US economy is expected to significantly heat up in 2026 that is to say, the US economy is expected to grow faster than market expectations in 2026.