Goldman Sachs previews non-farm payrolls: Data needs significant surprise to shake Fed's April rate cut expectations

Goldman Sachs stated that the upcoming US non-farm payrolls report for December 2025, set to be released Friday evening, is unlikely to substantially alter market expectations for Fed policy unless there is a major surprise in the data, as current market pricing is firmly anchored on the path to easing starting in mid-year. In a research report to clients, Goldman Sachs expects the non-farm employment figure to increase by around 70,000, in line with general expectations. Although informal market forecasts suggest a slight upside risk, the bank believes that a result close to expectations will strengthen rather than disrupt the existing macroeconomic narrative. The market is currently pricing in two 25 basis point rate cuts by the Fed this year, with the first 25 basis point cut expected in late April. Goldman Sachs stated that a significant upward or downward surprise in labor data would be needed to significantly bring forward or push back this timing. From a market perspective, Goldman Sachs describes non-farm payroll data falling in the range of 70,000 to 100,000 as the most favorable outcome for stocks, aligning with a scenario of continued economic expansion that does not reignite inflation concerns or threaten the rate-cut cycle. Such a result would support the view that the US economy is gradually slowing rather than suddenly stalling. In contrast, non-farm payroll data below 50,000 would be interpreted as below the estimated level of stable employment growth, potentially causing investor unease by raising concerns about a sharp slowdown in growth. On the other hand, Goldman Sachs stated that if the data exceeds 125,000, it could prompt the market to reassess the timing of the Fed's first rate cut, pushing back expectations for a rate cut to June.

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