PM Datanote: US Employment, November 2025

Lackluster, but not alarming enough for a January easing.

17 December 2025 US Monitor Undesirably high unemployment to remain the Fed's main worry in 2026

• Private payrolls are no longer slowing and the jump in unemployment was mostly due to the shutdown.
• Unemployment ex-temporary layoffs, however, is above its pre-Covid norm, and wider slack is building.
• Some indicators of hiring indicators have improved recently, but layoff plans also have picked up.

16 December 2025 US Monitor November CPI data unlikely to ruin the festive mood

• Core CPI inflation likely fell to 2.9% in November, slightly below consensus, from 3.0% in September.
• Auto prices have remained unaffected by tariffs; increases in other goods prices have slowed.
• The rebound in airline fares probably has petered out; rent increases likely continue to slow gradually. 

15 December 2025 US Monitor November employment report to sustain pressure on the Fed to ease

• We expect a first estimate of a mere 50K rise in November payrolls, despite slightly better surveys...
• ...Retailers have hired relatively few seasonal workers; the upward bias in the first estimate should be mild.
• The unemployment rate likely ticked up to 4.5% in November, from 4.4% in October.

12 December 2025 US Monitor Weak October retail sales likely to set the tone for Q4

• We think retail sales dropped by a hefty 0.7% in October, dragged down by a big fall in auto sales. 
• A raft of indicators suggest that consumers’ spending will grow at a negligible pace in Q4. 
• The Thanksgiving week drop in continuing claims is a seasonal fluke; the trend remains upwards.

11 December 2025 US Monitor Expect a brief skip in the Fed's easing cycle, not a long hiatus

The dots imply three regional Fed presidents who will
vote in 2026 disagreed with this meeting’s easing...

...But we reckon all the permanent voters expect to
ease in 2026; labor data will trigger March action.

Year-over-year growth in the ECI was stable at 3.6%
in Q3, but leading indicators signal a sharp fall soon. 

10 December 2025 US Monitor FOMC likely will signal a Q1 pause, but only tentatively

• Investors already expect a two-meeting hiatus in the easing cycle; the FOMC will not signal a longer wait.
• Recent data surprises have reinforced the case for easing; much more data will be available in January.
• We expect 75bp of easing in 2026, but fiscal policy and FOMC personnel changes cloud the outlook.

9 December 2025 US Monitor Weaker labor demand is more than offsetting the immigration hit

• Immigration has slowed sharply this year, but the labor force likely still is growing, slowly.
• The recent upward creep in unemployment implies labor demand has slowed by more than supply.  
• Higher unemployment will squeeze wage growth and keep the pressure on the FOMC to continue easing.

PM Datanote: US Personal Incomes & Spending / Michigan Consumer Survey

Soft September sets for stage for more consumer weakness in Q4.

8 December 2025 US Monitor Consumer resilience is ebbing as year-end approaches

• Spending rose by 2.7% in Q3, but the stagnation in September likely foreshadows a very weak Q4.
• Real incomes are barely rising, and many near-real time indicators point to a sharp slowdown in growth.
• Q1 likely will be weak too, but bumper tax refunds and a pick-up in hiring will support a Q2 revival.

5 December 2025 US Monitor FOMC to lower inflation forecasts after September's PCE data

• We look for a 0.22% rise in the September core PCE deflator, which would keep the inflation rate at 2.9%...
• ...This will enable FOMC participants to lower their Q4 forecast, clearing the path for easing policy again.
• Initial claims plunged because seasonal adjustment has gone amiss; labor market slack is still rising.

4 December 2025 US Monitor Private payrolls probably holding up better than ADP's data suggest

• ADP’s numbers have considerably understated the initial official estimates of private payrolls this year. 
• Reliable surveys suggest an initial private print of 75K-to-100K in November, still too soft for comfort. 
• A raft of indicators point to consumer weakness in Q4. We think spending will rise by only around ½%.

3 December 2025 US Monitor Is the equilibrium unemployment rate increasing?

• Lower immigration, AI, tariffs and federal job cuts have potential to lift the natural unemployment rate...
• ...But firms are filling openings more easily and plan to slow wage growth, pointing to excess unemployment.
• No signs of excessive unemployment by state or by sector, indicative of a still-low equilibrium rate.

2 December 2025 US Monitor Is a 25bp easing in the funds rate next week now locked in?

• Investors see a near-90% chance of the FOMC easing  next week, back to levels before October’s meeting.
• Sometimes, the Chair moves markets during the  blackout via the WSJ, but that seems unlikely now.
• Manufacturing payrolls have fallen materially in 2025,  but likely aren’t a canary in the coalmine this time.

1 December 2025 US Monitor Why are tariff revenues falling short of everyone's projections?

• The average effective tariff rate is currently just 12%, far short of the near-20% widely expected in spring.
• China imports have dived; more imports than expected from Canada and Mexico are USMCA-compliant.
• The plunge in the Cass Freight Index looks alarming, but it probably is overstating weakness in industry.

PM Datanote: US PPI, September 2025

Core PCE inflation set to undershoot the FOMC’s forecast in Q4.

26 November 2025 US Monitor PPI data leave core PCE inflation set to undershoot the FOMC's forecast

• PPI and CPI data imply the core PCE deflator rose by just 0.22% in September.
• Goods price rises are slowing and retailers, especially auto retailers, are still partially absorbing the tariffs.
• The Conference Board’s consumer survey implies the labor market need more support from the FOMC.

25 November 2025 US Monitor Retail sales likely grew modestly in September, before a lackluster Q4

• We look for a subpar 0.3% increase in September retail sales, consistent with real spending edging down.
• Food service sales likely fell sharply, while the more reliable indicators of control sales were soft.
• Bloomberg Second Measure data, Google search volumes and hotel room occupancy signal a weak Q4.

24 November 2025 US Monitor Near-4% growth in average hourly earnings overstates the trend

• Growth in average hourly earnings is resilient because fewer entry level workers are being hired...
• ...Rising unemployment, the low quits rate and a wide range of surveys all point to an underlying slowdown.
• The NY Fed’s Williams still sees room to ease policy “...in the near term”, bolstering our December call.

PM Datanote: US Employment, October 2025

Payrolls flattered by the seasonals; rising unemployment keeps a December easing in play.