The Job Market Flexes Its Muscle

• December job gains of 130,000 nearly doubled expectations of 75,000, with the three-month moving average showing a positive longer-term trend
• Real average weekly earnings increased 1.9% year-over-year, the largest gain since March 2021, indicating wages are outpacing inflation
• The jobs report was the fourth consecutive one delayed by government shutdown, released alongside retail sales and inflation data in the same week

Summary

Key Employment Data:

U.S. employers added 130,000 jobs in December, substantially exceeding expectations of 75,000 and marking the strongest month-over-month performance since December 2024. The unemployment rate declined to 4.3% from 4.4%. The three-month payroll moving average shows an upward trend, indicating positive momentum beyond monthly volatility.

Economic Context:

This marks the fourth consecutive jobs report delayed by government shutdown, resulting in an unusual concentration of economic data releases (payrolls, retail sales, and inflation) within a single five-day period. Real average weekly earnings increased 1.9% year-over-year—the largest gain since March 2021—demonstrating that wage growth is outpacing inflation.

Market Implications:

The job market appears to be stabilizing after recent volatility in 2025, providing a constructive backdrop for the U.S. economy. With workers earning more in real terms, consumer spending power is strengthening, which could further accelerate if the proposed "One Big Beautiful Bill" legislation delivers larger tax refunds.

Outlook:

The combination of solid job growth, declining unemployment, and positive real wage growth creates favorable tailwinds for economic expansion. Increased consumer purchasing power positions the economy well for continued growth in coming months.

Source: Analysis authored by Mike Dickson, CFA, from Horizon Investments' asset management team. The data suggests a meaningful improvement in labor market conditions entering 2026 after experiencing uncertainty throughout 2025.