US labour market still weak

 The BLS labour market data for December were released overnight (my time zone).  

Payrolls continue to slide.

The ADP data only cover the private sector

The estimate for the unemployment rate for November was revised down slightly, and in December, it was estimated to have fallen.  But remember, economic time series data always get revised.  I wouldn't get too excited about this (but see the second last chart, below)

The change in the unemployment rate over 6 months correlates well with the cycle.  I've plotted it inverted, as unemployment goes up when the economy is weak, and down when it's strong.  So far, it looks as if it's still weakening, i.e., the trend in unemployment is still up.

The "Jobs hard to find" component of the University of Michigan consumer confidence survey is continuing to surge.  Not a good sign.

However, the whole-economy ISM (the unweighted average of manufacturing and services ISM indices) is rising.   It leads the change in the unemployment rate by a couple of months.  So it is possible that the unemployment rate may have stopped rising.

Overall conclusion:  not recession, but most likely stagnation.   

The chart below shows the whole-economy PMI for the last 40 years.  Notice that in every previous cycle, when this time series turns up, it keeps going.  Over the last two years, it's just phaffed around and is no higher than it was in 2022, and continues to zig-zag around the 50% "recession line".  In a word: stagnation.

Has it turned up for this cycle?  Perhaps.  But uncertainty is always a killer for economic growth.  If you have lots of questions about economic and political policy, you spend less, you hire fewer people, you don't invest in plant and equipment, and you postpone decisions.  There's nothing to suggest that this environment has changed.  Who knows where tariffs are going?  Who knows just how badly consumer spending will be affected by the removal of health-care subsidies?  Who knows how much inflation will rise because of tariffs and the deportation of agricultural workers?  Caution, right now, is good policy.  Incidentally, that also implies that labour lay-offs will also be limited.   Firms won't hire or fire.  (Exception: small companies, which right now are firing)  The time to panic will be if/when lay-offs start rising.