Friday's Jobs Data Measures the US Economy, Possibly Triggering Shocks in the US Market

 

The December non-farm payrolls data is due on Friday (Jan. 10). Investors anticipate this jobs report to show that the US economy is stable but not overheating, allowing the US market to gain in 2025.

 

From the end of December 2024 to early January 2025, the stock market went from volatile to gradually cooling. The S&P 500 closed up 23% in 2024, the largest two-year gain since 1997-1998.

 

Whether the stock market can sustain such a rally partially depends on the economic strength. Labor market data is one of the most important indicators of a strong economy.

 

Anthony Saglimbene, chief market strategist at Ameriprise Financial, said investors wanted to confirm that the labor market remained solid because solidness means the potential steady economic outlook. Hence, if the real data falls short of expectations, the stock market may be volatile.

 

Such attention is resulted from widespread investor optimism about the US economy. A Natixis Investment Managers' survey in late 2024 showed that 73% of institutional investors believed the US could avoid a recession in 2025.

 

However, in recent months, The aerospace industry strikes and hurricanes have made the labor market data volatile. November's job growth is 227,000, much better than October's modest growth.

 

Capital Economics analysts reported that America's three-month average growth was 138,000, indicating a gradual slowdown in job growth.

 

Economists expected the December nonfarm payrolls report released on January 10 to show job growth of 150,000 and the unemployment rate of 4.2%.

 

Angelo Kourkafas, senior investment strategist at Edward Jones, reminded investors to be wary of whether the jobs report shows the economy is overheating, with rallying inflation as one of the main market risks in early 2025.

 

In addition, last month, the Federal Reserve cut its estimate of the number of rate cuts in 2025, worrying investors. The jobs data helped investors figure out the direction of the Fed's rate policy.

 

 

Nonfarm payrolls: 165,000 growth

 

Unemployment rate: 4.2%

 

Monthly Average Hourly Earnings: adding 0.3%

 

Average hourly earnings year-over-year: up 4%

 

Average hours worked per week: 34.3

 

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