Economic data releases send mixed signals; Citibank forecasts December non-farm employment data may fall short of expectations

GasFeeNightmare · 2026-01-04T17:55:48+00:00

Citigroup economists are cautious about the upcoming non-farm payroll data, noting that the number of unemployment benefit claims unexpectedly declined during the holiday period, possibly due to seasonal adjustment issues. Although overall layoffs are moderate, the forecast for December non-farm employment is only an increase of 75,000, with the unemployment rate rising to 4.7%. These data will influence market sentiment and economic expectations.

GasFeeNightmare

2026-01-04 17:55:48

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The non-farm payrolls data that the Federal Reserve is watching closely is about to be released, and Citi economists have made interesting observations about recent labor market performance. According to the latest report, this financial institution remains cautious about the initial jobless claims data around the Christmas holiday period.

During Christmas week, initial claims for unemployment benefits dropped from 215,000 to 199,000. While this appears to be a significant decline, Citi originally forecasted this number to be around 220,000. This deviation has raised concerns among economists—they believe that seasonal adjustment issues during holiday weeks this year are more pronounced than in previous years, which could distort the data signals. Truly accurate employment market signals may only be confirmed in late January.

Interestingly, although initial claims have fluctuated, the overall scale of layoffs remains relatively moderate. This provides some positive signals to the market.

Regarding the upcoming non-farm payrolls report next week, Citi’s forecast is relatively conservative—December non-farm employment is expected to increase by only 75,000. Additionally, for the unemployment rate, Citi expects this figure to rise to 4.7%. This increase is noteworthy, partly because the labor force participation rate may further rise, which typically reflects more people re-entering the job market.

These data points have a significant impact on market sentiment, as investors and traders will adjust their expectations for the economic outlook and policy direction based on the actual non-farm payrolls figures.

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