The December NFP Miss: A Tactical Entry Point for Commodity-Bound Equities?

The December 2025 Non-Farm Payrolls (NFP) report delivered a stark reminder of the fragility of the U.S. labor market. With job creation falling short of expectations by 10,000-adding just 50,000 jobs versus the projected 60,000-the report underscored a broader economic malaise. Simultaneously, the manufacturing sector, already in its 10th consecutive month of contraction, posted its lowest ISM Manufacturing PMI reading of the year at 47.9, signaling persistent weakness. These developments, coupled with infrastructure spending plans and surging demand for metals in AI-driven data centers, present a complex landscape for investors. This analysis explores whether the December NFP miss, combined with slowing manufacturing and wage growth, could catalyze a surge in commodity-bound equities, particularly those tied to industrial and infrastructure metals.

The NFP Miss: A Catalyst for Policy Interventions?

The December NFP miss, while modest, occurred against a backdrop of declining manufacturing activity and a stubbornly low unemployment rate of 4.4%. This dichotomy-strong labor underutilization metrics paired with weak job creation-has sparked debates about the Federal Reserve's policy trajectory. Historically, such divergences have prompted central banks to recalibrate monetary policy, often through rate cuts or stimulus measures. For instance, the 0.3% monthly increase in average hourly earnings (up 3.8% annually) suggests inflationary pressures could persist, complicating the Fed's balancing act between tightening and easing. If policymakers respond with accommodative measures, the resulting liquidity could flow into sectors reliant on industrial metals, such as construction and infrastructure.

Manufacturing Contraction: A Double-Edged Sword

The U.S. manufacturing sector's prolonged contraction, marked by a 47.9 PMI in December 2025, highlights structural challenges. Weak new orders, elevated tariffs, and labor shortages have eroded business confidence, with employment in the sector declining for 11 consecutive months. These trends could dampen demand for industrial metals in traditional manufacturing applications, such as machinery and automotive production. However, the same policy responses aimed at mitigating unemployment and wage stagnation-such as tax cuts or infrastructure spending-could offset this drag. For example, the Trump administration's $200 billion infrastructure plan, designed to leverage $1.5 trillion in total investment, is projected to drive steel demand for projects like the I-10 Calcasieu River Bridge and the Brightline West high-speed rail system.

Infrastructure Spending: A Silver Lining for Metals

While manufacturing struggles, infrastructure spending is emerging as a critical driver of metal demand. The $200 billion federal initiative includes not only traditional projects but also data center construction, which has become a major steel consumer. For instance, Meta's Mesa Data Center in Arizona is estimated to require 12,000 tons of steel, while Amazon's $15 billion expansion in Indiana will necessitate significant procurement. According to the U.S. Census Bureau, data center construction spending hit a seasonally adjusted annual rate of $41.4 billion in August 2025, up 26% year-on-year. This trend is further supported by the American Iron and Steel Institute, which forecasts U.S. steel demand to grow by 1.8% in 2025 and 2026.

The Interplay of Factors: A Tactical Entry Point?

The December NFP miss and manufacturing slowdown may paradoxically accelerate demand for metals through two pathways. First, a weaker labor market could pressure policymakers to prioritize infrastructure spending as a tool for job creation, directly boosting demand for steel, copper, and aluminum. Second, the manufacturing sector's contraction has left pent-up demand in construction and public works projects, which are now being addressed by the Trump administration's infrastructure agenda. For example, the 15%–30% steel cost share in LNG terminals like the Calcasieu Pass project underscores the sector's reliance on industrial metals.

However, risks remain. Tariff uncertainty, particularly under the Trump administration, has raised input costs and disrupted supply chains, with the average tariff on imported goods reaching 17%. Additionally, the pending U.S. Supreme Court ruling on the legality of these tariffs introduces regulatory volatility. Investors must also weigh the potential for a broader economic slowdown to dampen infrastructure spending, despite its current momentum.

Conclusion: Balancing Opportunity and Caution

The December NFP miss, while a cause for concern, may represent a tactical entry point for investors in commodity-bound equities. The interplay of weak job creation, manufacturing contraction, and aggressive infrastructure spending creates a scenario where industrial metals-particularly steel and copper-could see sustained demand. However, the path is not without risks. Tariff-driven inflation, global trade tensions, and the outcome of the Supreme Court case on tariffs could all disrupt this trajectory. For now, the data suggests that companies positioned to benefit from infrastructure and data center construction, such as steel producers and construction materials firms, warrant closer scrutiny. As the 2026 outlook unfolds, the key will be monitoring how policy responses and market dynamics align to either amplify or temper these trends.