This week delivers a critical batch of employment data that will heavily influence the Federal Reserve's upcoming decision on interest rates. With the central bank's next policy meeting scheduled for January 27-28, officials will scrutinise every data point to gauge the health of the crucial US labour market.
A Flood of Labour Market Indicators
The data deluge begins on Wednesday, January 7, with the release of the ADP National Employment Report for December at 8:15 AM Eastern Time. Economists polled by FactSet anticipate that private employers added 25,000 jobs in December, marking a recovery from November's loss of 32,000 payrolls. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, suggests that if recent weekly trends held, the gain could be as high as 45,000.
Also on Wednesday, the Bureau of Labor Statistics (BLS) will publish its Job Openings and Labor Turnover Survey (JOLTS) for November at 10 AM ET. This report details job openings, quits, and layoffs. Mike Reid of RBC expects job openings to rise slightly to 7.8 million for November. The Indeed Job Postings Index, a leading indicator, also showed an uptick in November, suggesting sustained labour demand.
Focus Shifts to the Unemployment Rate
While mid-week reports provide valuable signals, the primary focus will be on the official BLS jobs report for December, due this Friday. This report will reveal the unemployment rate, a metric the Fed closely watches. A majority of economists forecast that the unemployment rate edged down to 4.5% in December from 4.6% in November.
The Fed's attention has increasingly turned to labour conditions over the past year. With high tariffs failing to spur significant inflation, policymakers are more concerned about potential weakness in employment. A stable or improving jobs picture would support the case for keeping interest rates steady.
Implications for Interest Rates and Markets
The collective message from this week's data will directly shape monetary policy. If the job market shows signs of perking up, the Fed is more likely to leave interest rates unchanged at its late-January meeting. Such a pause could extend for a sustained period, providing clarity to investors and markets.
Additional insights will come from Bank of America's labour data on Wednesday and Revelio Labs' estimates on Thursday, alongside the weekly jobless claims report. Analysts will piece together these complementary signals to form a complete picture of US employment as the new year begins, setting the stage for the Fed's first major policy decision of 2026.
