Economic Perspectives - 01/09/26

• The headline news for jobs this week was the release of the December employment situation report by the Bureau of Labor Statistics (BLS). The BLS reported a 50,000 increase in jobs creation in December and 4.4% unemployment rate. 
  
• Separately, the BLS reported a decline in job openings in November. Job openings fell from 7,449,000 in October to 7,146,000 in November. This was a 14-month low. In a sign that employees may be worried about the ability to find a new job if they leave their current job, the number of quits fell by 188,000. 
  
  
• The Department of Labor reported an 8,000 increase in initial jobless claims last week. Even with the increase, initial jobless claims were 208,000, which remains in the 200,000 to 250,000 range that has existed since the summer of 2023. Continued claims rose by 56,000 and continued to show a slow rise. 
  
  
• ADP reported a 41,000 gain in nonfarm payrolls in December after a 29,000 decline in November. 
  
  
• The Challenger layoff announcement report showed an 8.3% year-over-year increase in announced layoffs in December after declining 23.5% in November. 

• The Mortgage Bankers Association reported a 0.3% increase in mortgage applications last week. This was an improvement over the 10% decline the week before. 
  
  
  • Applications to purchase a house fell 6.1% but applications to refinance rose 7.4%. 
    
    
  • The average 30-year mortgage rate fell from 6.32% to 6.25%.
    
    
• Housing starts fell 4.6% in October after falling 9.1% in September. This is clearly not helping the housing shortage and affordability situation in the US.
  
  
• In a discouraging sign for potential future increases in housing inventory, building permits fell 0.2% in October after falling 2.3% in September.

• ISM reported further contraction in the manufacturing sector as its manufacturing index fell from 48.2 to 47.9. A reading below 50 means activity is contracting.
  
  
• S&P Global also reported further deterioration in the manufacturing sector as its manufacturing index fell from 52.2 to 51.8. Its index remains in positive territory but is deteriorating.
  
  
• The Census Bureau reported a 1.3% decline in factory orders in October. This compared to a 0.2% increase in September.

• The Census Bureau reported a solid decline in the nation's trade balance deficit as the trade balance fell from a $48.1 billion deficit in September to a $29.4 billion deficit in October. 
  
  
  • Imports fell from $342.1 billion to $331.4 billion.
    
    
  • Exports rose from $289.3 billion to $302.0 billion.

Total vehicle sales rose from 15.6 million vehicles in November to 16.0 million in December.

To close out 2025, most businesses rated their current performance as average. The percentage of companies rating current performance as average ranged from a high of 59.6% for the Agriculture, Forestry, Fishing and Hunting industry sector to a low of 36.4% for the Utilities sector. Even though the Average was the highest overall result, beneath the surface weakening has occurred since the survey for this topic started (9/24/23). This was evidenced by a weakening in the Net Positive (Excellent plus Above Average) results and an increase in the Net Negative (Below Average plus Poor) results. When comparing 12/28/25 results to 9/24/23 results, 13 out of the 18 industry sectors experienced a decrease in the Net Positive results and 10 out of the 18 sectors experienced an increase in the Net Negative results.

It is important to remember that these survey results fall on the “soft” side of economic data as the results reflect each business owner's assessment of their company's current performance. They may reach their assessment by using a combination of hard data (i.e., financial results) and their own feelings. Whether this results in changes to their behavior in 2026 remains to be seen.