New Year’s First Week “Data Storm”: NFP to Set the Tone

In the first week of the new year, the market will quickly shift from holiday mode to a “data-driven” state, welcoming key U.S. employment and services data. These figures will provide the first crucial evidence for gauging the pace of the Federal Reserve’s rate cuts in 2026. Meanwhile, Services PMI data from the Eurozone and the UK will offer clues for the policy paths of their respective central banks.

Key Event to Watch:

1. U.S. December ISM Manufacturing PMI – Monday

The ISM Manufacturing PMI is a key indicator of the health of the U.S. manufacturing sector. The index stood at 48.2 in November, marking its ninth consecutive month in contraction territory (below the 50-point threshold), indicating a persistent downturn. For the December report, attention should be on the sub-indices for new orders and production, as well as whether the manufacturing employment index can halt its decline.

2. Eurozone December Services PMI (Final) – Tuesday

The final reading of the Services PMI will confirm the resilience of the sector’s expansion. The preliminary December data showed that while the Composite PMI slowed to 51.9, the Services PMI remained at an expansionary level of 52.6, acting as a “ballast” for the economy. The market will focus on the rise in services’ input costs and selling prices (which hit a nine-month high in December), as this relates to inflation stickiness and ECB policy.

3. U.S. December ISM Non-Manufacturing PMI – Wednesday

As the service sector constitutes the largest part of the U.S. economy, the ISM Non-Manufacturing PMI is of paramount importance for judging economic momentum. Close attention should be paid to its business activity and employment components. In the low-liquidity environment of the new year, any unexpected weakness could trigger significant market volatility.

4. U.S. December Non-Farm Payrolls Report – Friday

This is the grand finale and absolute focus of the first week of the new year. The three key areas to watch are: whether new job growth returns to a more moderate level after strong growth in November; whether the unemployment rate can remain stable at a low level (4.1% in November); and whether the growth in average hourly earnings can stay moderate, which is crucial for the inflation outlook.

Data that is too strong (especially wages) could reignite concerns about inflation and tightening, pressuring risk assets. Conversely, data that is too weak could spark recession fears and potentially reinforce market expectations for faster Fed rate cuts. The outcome will directly set the tone for the U.S. dollar, U.S. stocks, and global assets at the start of the new year.