1. US Services Index Climbs, Price Gauge Hits Highest Since 2023 — The Institute for Supply Management’s index of services advanced 2 points to 54.1 last month, the group said Tuesday. Readings above 50 indicate expansion. The measure of prices paid for materials and services rose more than 6 points to 64.4. The acceleration in the cost gauge comes as Federal Reserve policymakers adopt a more cautious approach to lowering interest rates and amid uncertainty about what kind of tariffs the upcoming Trump administration may slap on imports. Resilient demand, illustrated by the pickup in business activity and stronger orders, adds to concerns that inflation will remain stubborn.
2. US Firms Add 122,000 Jobs in ADP Data, Fewest Since August — Employment rose by 122,000 last month — the least in four months — following a 146,000 increase in November, according to ADP Research Institute data published Wednesday. The median projection in a Bloomberg survey of economists called for a rise of 140,000. The report showed employment growth was mixed across industries. Education and health services, construction as well as leisure and hospitality registered the biggest increases. Manufacturing, natural resources and mining as well as professional and business services saw declines in headcount. The latest’s figures suggest the gradual softening in the US labor market in 2024 extended through the end of the year. Federal Reserve officials will have to balance that trend against renewed inflation fears in deciding how far to continue cutting interest rates in 2025 and beyond.
3. U.S. payrolls grew by 256,000 in December, much more than expected; unemployment rate falls to 4.1% — Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast from the Dow Jones consensus, the Bureau of Labor Statistics reported Friday. The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. An alternative measure that includes discouraged workers and those holding part-time positions for economic reasons moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
4. US Consumer Inflation Expectations Jump to Highest Since 2008 — US consumers’ long-term inflation expectations jumped to the highest since 2008 on concerns about potential tariffs from the incoming Trump administration. Americans expect prices will climb at an annual rate of 3.3% over the next five to 10 years, up from the 3% expected last month, according to the University of Michigan’s preliminary January survey released Friday. They also see costs rising 3.3% over the next year, up 0.5 percentage point from December.

The week ahead — Economic data from Econoday.com:

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