Weekly Update 1/9/2026: US Employers Add 50,000 New Jobs in December While Unemployment Rate Drops; US Third Quarter Productivity Comes in Strong
Please note we are attaching a link to our SGK Email Podcast – please feel free to share with friends, family and those you feel would benefit from the services SGK provides – Cheers!
SGK Link Here: https://open.spotify.com/episode/6wLp0BUImhtvvK2qjDWCoK?si=JCGMaRaiT7yQV3UjvH5qNA January 9, 2026
- Disney Zootopia 2 becomes the biggest Hollywood film ever released in China
- RTX wins a $438 million FAA contract
- Amgen acquires cancer drug developer Dark Blue Therapeutics Ltd.
- Boeing wins Alaska Air Group Inc. order for 110 planes
- JP Morgan will replace Goldman Sachs Group Inc. as the partner for Apple Inc.’s credit-card business
Domestic Economic News
US employers added fewer jobs than expected in December, capping a yearlong slowdown in the labor market defined by cautious hiring and limited layoffs. Nonfarm payrolls increased 50,000 last month after downward revisions to the prior two months, according to Bureau of Labor Statistics data out Friday. The unemployment rate edged down to 4.4%, settling back after the record-long government shutdown. The gradual cooling in the US labor market prompted the Federal Reserve to cut interest rates three straight times to close out 2025. While it was one of the weakest years for hiring since 2009, employers have also largely refrained from layoffs. The December data also suggest the labor market remained fragile at the end of the year, and the outlook for hiring is guarded. Economists see another year of limited job opportunities and cooling pay gains, likely exacerbating voters’ affordability concerns going into this year’s midterm elections. “The jobs report is telling the “same kind of story we’ve been seeing from all the other data, which is it’s a labor market that’s weakening,” said Betsey Stevenson, a professor of public policy and economics at the University of Michigan. “We don’t see a lot of job growth, but that’s not translating into a lot of unemployment.” Fed officials, who next meet later this month, are divided over how much further to lower rates this year. Traders maintained expectations that policymakers will hold rates steady at their January meeting, while the S&P 500 opened higher and Treasury yields were up. The advance in payrolls was led by leisure and hospitality as well as health care, both of which drove job gains last year. Private payrolls increased by 37,000, just a fraction of what was seen in the same month a year earlier. Headcount fell in retail trade, construction and manufacturing. The report offers a cleaner look at the underlying trend in hiring after the shutdown and deferred resignations of federal workers affected the numbers in the prior two months.
US consumer sentiment rose in recent weeks on slightly more upbeat views about the economy as tariff concerns fade. The preliminary January sentiment index climbed to 54 from 52.9 in December, according to the University of Michigan. The survey period includes responses from Dec. 16 to Jan. 5. The median estimate in a Bloomberg survey of economists called for a reading of 53.5. Consumers expect prices to rise at an annual rate of 4.2% over the next year, unchanged from a month earlier, the data showed Friday. And they saw costs rising at an annual rate of 3.4% over the next five to 10 years. In the previous month, they expected 3.2%. A stubbornly high cost of living, along with concerns about limited job opportunities and prospects for higher wages, has kept sentiment hovering just above a record low. At the same time, consumer spending has proved durable and helped fuel the economy. “Although consumers’ worries about tariffs appear to be gradually receding, they remain guarded about the overall strength of business conditions and labor markets,’’ Joanne Hsu, director of the survey, said in a statement.
US manufacturing activity shrank in December by the most since 2024, capping a rough year for American factories. The Institute for Supply Management's manufacturing index edged down to 47.9 from 48.2, according to data released Monday. The measure has been below 50, which indicates contraction, for 10 straight months. The decline in the measure reflected producers drawing down their raw materials inventories at the fastest rate since October 2024. That indicates many firms are relying on existing stockpiles to satisfy tepid demand. Plus, materials costs remain elevated. The ISM prices-paid index, which held at 58.5 last month, is 6 points higher than it was at the end of 2024. New orders contracted for a fourth month and export bookings remained weak, based on the ISM data. Headcount shrank for an eleventh straight month, albeit at a slower pace, amid modest production growth. One bright spot in the report was customer inventories shrank at the fastest pace since October 2022, suggesting factory orders and production could firm in coming months. Still, tariffs and the overall economic uncertainty that President Donald Trump's shifting trade policy caused during his first year in office have proved challenging for many companies as they weighed expansion plans. But looking ahead, abating tariff uncertainty and the passage of the One Big Beautiful Bill Act are anticipated to offer a tailwind to capital expenditures this year. The ISM's gauge of imports shrank to a seven-month low, while supplier delivery times slowed and order backlogs continued to shrink.
US services activity expanded in December at the fastest pace in more than a year, fueled by solid demand growth and a pickup in hiring. The Institute for Supply Management’s index of services rose 1.8 points to 54.4, the highest since October 2024, the group said Wednesday. Readings above 50 indicate expansion in the largest part of the economy. The December figure exceeded all projections in a Bloomberg survey of economists. New orders expanded by the most since September 2024 and a measure of business activity, which parallels the ISM’s factory output gauge, climbed to a one-year high. Export bookings grew at the fastest pace in more than a year. The pickup in demand helped spark the healthiest growth in services employment since February. The government’s monthly jobs report out Friday is projected to show moderate payrolls growth in December and a lower unemployment rate than a month earlier. Meanwhile, ISM’s index of prices paid for services and materials showed the slowest growth in nine months. Inventories expanded at the fastest pace since October 2024, based on the ISM’s gauge. Even so, a measure of inventory sentiment fell for a third month, suggesting fewer service providers saw their stockpiles as being too high. The supplier deliveries index fell 2.3 points from the highest level in a year.
US mortgage rates fell last week to the lowest level since September 2024, a hopeful sign for the sluggish housing market to start the new year. The contract rate on a 30-year mortgage dropped 7 basis points to 6.25% in the week ended Jan. 2, which included New Year’s Day, according to Mortgage Bankers Association data released Wednesday. The rate on a 30-year jumbo mortgage, which is used to finance purchases of more expensive homes, fell to 6.32%, the lowest since April 2023. The figures are encouraging for a housing market that’s been hamstrung by affordability constraints in recent years. Contract signings have now picked up for four straight months, according to the National Association of Realtors, pointing to building momentum for sales going into the new year. Despite the decline in borrowing costs, MBA’s purchase index fell a seasonally adjusted 6.2% last week. That said, it’s typical to see less buyer interest and greater volatility around year-end holidays. The refinancing gauge, however, rose an adjusted 7.4%. The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
Hiring at US companies rose in December at a moderate pace, pointing to sluggish momentum heading into 2026. Private-sector payrolls increased by 41,000, according to ADP Research data released Wednesday, after declining in the prior month. The median estimate in a Bloomberg survey of economists called for a 50,000 gain. The report adds to evidence of a gradually cooling, but not rapidly deteriorating, labor market. Hiring has been tepid recently and unemployment has risen, which is weighing on not only economists’ forecasts heading into the new year, but also Americans’ own views of their employment prospects. Gains were led by education and health services as well as leisure and hospitality. Payrolls declined in professional services and manufacturing. Smaller businesses also resumed hiring after months of shedding workers. “Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,” Nela Richardson, chief economist at ADP and a contributor to Bloomberg Television, said in a statement. Weakness in the labor market has been top of mind for Federal Reserve officials who cut interest rates three straight times to close out 2025. Policymakers are trying to balance that with stubborn inflation as they weigh further reductions in the new year. The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed wage growth accelerated for workers who changed jobs, after registering the smallest annual gain since 2021 in the prior month. They saw a 6.6% gain, while those who stayed put saw a 4.4% advance in December. ADP bases its findings on payrolls covering more than 26 million US private-sector employees. In addition to the monthly reports, ADP also releases separate data on a weekly basis. Payrolls were positive in each of the last three readings.
US inflation expectations rose in December while perceptions of job availability were the worst in at least 12.5 years, according to a monthly survey from the Federal Reserve Bank of New York. Consumers saw prices rising 3.4% over the next year, up from 3.2% in November, according to a report released Thursday. The probability consumers assigned to finding a job if they lost theirs fell to 43.1% — the lowest in the history of the bank’s Survey of Consumer Expectations, which dates to mid-2013. The numbers highlight the divide between Fed officials who are more concerned about inflation and those who see rising unemployment as the greater risk. That gap is likely to keep the US central bank from adjusting interest rates at its next policy meeting later this month. The survey results come ahead of monthly employment figures due Friday from the Bureau of Labor Statistics, and data on consumer prices due Jan. 13. The New York Fed survey showed consumers put the probability of missing a minimum debt payment over the next three months at 15.3%, the highest since April 2020. At the same time, the share of respondents saying they expected their financial situations to improve over the next year rose to the highest level since February 2025. Inflation expectations for three and five years ahead were both unchanged at 3%.
The monthly trade deficit continued to shrink in October after President Trump imposed sweeping tariffs on imports, the latest data showed. The US trade deficit unexpectedly narrowed in October to the smallest since 2009 on a sharp pullback in imports, notably pharmaceuticals. The goods and services trade gap shrank 39% from the prior month to $29.4 billion, Commerce Department data showed Thursday. The deficit was smaller than all estimates in a Bloomberg survey of economists. The report was delayed for over a month because of the federal government shutdown. Imports decreased 3.2%, reflecting declines in inbound shipments of medication and nonmonetary gold. Imports of pharmaceutical preparations dropped to the lowest since July 2022. The value of all US goods and services exports rose 2.6% in October. The figures aren’t adjusted for inflation. Companies frontloaded imports of drugs in September, likely in anticipation of President Donald Trump announcing what would be a 100% tariff on pharmaceutical imports to start Oct. 1, which ended up being delayed. Many companies were able to avoid the duty by striking deals with the administration in exchange for promises to lower drug prices. There have been large monthly swings in trade this year related to US implementation of tariffs. In particular, there’s been a surge in trade of nonmonetary gold and pharmaceutical preparations in recent months in response to Trump’s vacillating tariff announcements. In addition to the decline in gold, imports of other industrial supplies and materials such as oil and metals also fell. Inbound shipments of computers and computer accessories picked up, suggesting “there are genuine signs of strength elsewhere in the economy amid the AI buildout,” Bradley Saunders, North America economist for Capital Economics, said in a note. Separate government figures showed labor productivity accelerated in the third quarter to the fastest pace in two years, which stands to improve even more as companies invest more in artificial intelligence. The trade volatility has also affected the government’s measure of economic activity — gross domestic product. Before the latest trade report, the Federal Reserve Bank of Atlanta’s GDPNow forecast net exports would subtract 0.3 percentage point from fourth-quarter growth. In the third quarter, they added 1.59 percentage points. Trade in gold, unless used for industrial purposes such as in the production of jewelry, is excluded from the government’s GDP calculation. On an inflation-adjusted basis, which filters into the real GDP measurement, the merchandise trade deficit narrowed to $63 billion in October, the smallest since February 2020. Jobless claims rose 8000 to 208,000 in the week ending Jan. 3 compared with the median estimate for 212,000 Labor Department data showed Thursday. The prior week claims were revised up to 200,000 from 199,000 The 4-week moving average came in at 211,750 in the week ending Jan. 3.
Interest Rate Insight and the Fed
Federal Reserve Governor Stephen Miran said the US central bank will need to cut interest rates by more than a percentage point in 2026, arguing monetary policy is restraining the economy. “I think it’s very difficult to argue that policy is about neutral. I think policy is clearly restrictive and holding the economy back,” Miran said Tuesday during an appearance on the Fox Business Network. “I think that well over 100 basis points of cuts are going to be justified this year.” Fed officials cut interest rates last month for a third consecutive time, but signaled additional near-term reductions aren’t guaranteed. Policymakers are split over the outlook for inflation and the labor market and penciled in one cut for 2026, according to the median estimate in their latest projections. Miran’s comments come after other officials said this week that interest rates may now be close to the neutral level that neither boosts nor restrains economic growth. Miran has been calling for aggressive rate cuts since September, when he went on leave from his post as chair of the White House Council of Economic Advisers to fill a Fed governor term that ends this month. Richmond Fed President Tom Barkin, in comments earlier Tuesday, nodded to the current level of rates being “within the range of its estimates of neutral,” referring to the projections published in December. Minneapolis Fed chief Neel Kashkari, speaking Monday, said his guess was that “we’re pretty close to neutral right now” given resilient economic growth. The central bank’s benchmark is currently within a 3.5% to 3.75% band, and the estimates of the neutral level among the 19 policymakers on the rate-setting Federal Open Market Committee range from 2.6% to 3.9%, though the median estimate is 3%. “Going forward, policy will require finely tuned judgments balancing progress on each side of our mandate,” Barkin said Tuesday in his remarks to the Raleigh Chamber of Commerce. “With the hiring rate low, no one wants the labor market to deteriorate much further; with inflation above target now for almost five years, no one wants higher inflation expectations to get embedded. It’s a delicate balance.”
Impactful International News
UK food inflation rose for the first time since August last month, the British Retail Consortium said, nudging shoppers to seek value items during the key Christmas trading period for retailers. Food prices rose 3.3% from a year earlier in December, up from 3% the previous month. That drove an uptick in overall shop price inflation to 0.7% year-on-year, as non-food prices continued to drop, the BRC said in a report Tuesday. Food prices are an outlier after overall UK inflation dropped more than expected in November, and risk further damaging consumer sentiment which tumbled amid concerns about higher taxes at the end of 2025. Higher prices helped UK supermarket sales reach a record £13.8 billion ($18.7 billion) in the four weeks to Dec. 28, up 3.8% from a year earlier, according to a separate report from Worldpanel by Numerator on Tuesday. Shoppers spent £476 on average at supermarkets, £15 more than in December 2024. But spending on promotions and deals rose to a third over the festive period, the Worldpanel data showed, the highest proportion of overall sales since December 2019, before the pandemic. Discounters Aldi and Lidl both reported record Christmas sales, another sign of stretched shoppers seeking affordable options over the holiday period. Other UK supermarkets are due to give trading updates this week. Ocado and Lidl posted the biggest sales gains in the Worldpanel data at 15% and 10% respectively, while Asda and Co-op sales dropped year-on-year. Shoppers also spent more on premium own-range brands at the supermarkets, treating themselves over Christmas. Sales of these own-label lines exceeded the £1 billion milestone for the first time in December, according to Worldpanel. Meanwhile food inflation is likely to remain “sticky” in 2026 as retailers face cost pressures from regulations and higher levies, the BRC said. “Shoppers will continue to seek out lower prices and promotional offers,” said Mike Watkins, head of retailer and business insight at NIQ, which compiled the data for the BRC.
Euro-area inflation eased to the European Central Bank’s target, supporting the view of policymakers that interest rates can stay at current levels unless the economic outlook changes significantly. Consumer prices rose 2% from a year ago in December, down from 2.1% in the previous month and matching economists’ estimates. Core inflation, which strips out volatile food and energy costs, slowed to 2.3%, while closely-watched services inflation also eased. Price growth has been hovering around the 2% goal for more than half a year, allowing the ECB to keep borrowing costs unchanged since June. Economists and investors don’t envisage any further moves for the foreseeable future. Traders added to wagers on monetary easing, pricing as much as five basis points of cuts through September this year. That’s equivalent to a 20% chance of another quarter point cut. After the release the euro erased an earlier drop, and traded flat around $1.169.
German factory orders unexpectedly rose for a third month in November, suggesting that a recovery is taking hold in Europe’s largest economy. Demand jumped 5.6% from the previous month, the biggest gain in a year. That follows two solid increases that have fueled hope that manufacturers were starting to find their feet. Economists predicted a 1% decline. The gain was down to large-scale orders, but even excluding them, there was a 0.7% uptick, according to the statistics office. Germany has lost its role as the growth engine of the euro-zone economy, with some of the latest forecasts pointing to a meager expansion of just 0.2% last year. Carmakers are faring particularly poorly amid Chinese competition and US tariffs, and some 100,000 jobs in that industry are set to disappear by the end of the decade. Rising defense spending — and production — will only compensate for a fraction of what is set to be lost. That’s left business confidence muted — and German Chancellor Friedrich Merz sounding the alarm. “Certain sectors” of the country’s economy are in “very critical” condition, he wrote in a letter to lawmakers in his coalition, pledging to make reviving growth a top priority. His economic advisers recently trimmed their outlook for this year to below 1%, warning that a persistent decline in the competitiveness of German industry is partly to blame. “We need to break down existing structures and enhance competitiveness,” Merz said Thursday after a meeting of the CSU caucus group in Seeon in Southern Bavaria. While 2025 saw the largest number of startups ever founded in Germany — a fact that Merz said filled him with “great hope” — business conditions aren’t good enough. “The economic situation in Germany remains worrying,” he said. “Companies in Germany are in a very difficult situation.” A two-day meeting of Merz’s Christian Democratic leadership on Friday in Mainz to discuss planned social reforms was canceled due to urgent adverse weather warnings.
Company Events
SGK writes additional weekly commentary for clients of the firm detailing recent events and earnings of core equity holdings.
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Steigerwald, Gordon & Koch, Inc. [“SGK”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from SGK. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. SGK is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the SGK’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.sgkwealthadvisors.com. Please Note: SGK does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to SGK’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a SGK client, please contact SGK, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.