U.S. December non-farm payrolls data falls short of expectations, and the slight decrease in the unemployment rate cannot hide the worsening trend in the labor market.

Deep Tide TechFlow News, January 09, The US Bureau of Labor Statistics released data on Friday showing that in December, 50,000 new jobs were added, below economists’ forecast of 60,000. The unemployment rate fell to 4.4%, from 4.6% in November. After the November and October data were severely affected by the government shutdown, this release provides the most comprehensive picture of the US labor market in months. The November job gain was revised down to 56,000, from the initial estimate of 64,000.

This data further confirms signs of deterioration in the labor market, as federal government workforce reductions and slowing private sector hiring have impacted it. The Federal Reserve has lowered US borrowing costs in each of the past three meetings, maintaining its benchmark target rate range at a three-year low of 3.5-3.75%. Fed Chair Powell hinted in December that the threshold for further rate cuts is high, stating that current borrowing costs are “in a good place.”

However, weak December data may complicate the Fed’s rationale for pausing its rate cut cycle at its upcoming meeting later this month. The Fed also expressed concerns about the accuracy of recent Labor Department data, with Powell believing that the US economy adds 60,000 fewer jobs per month than reported. (Jin10)