Hiring by American businesses unexpectedly dropped last month, according to an estimate from payroll processor ADP. The dour report could provide more grist to officials who are on the fence over cutting rates again at the Federal Reserve's final meeting of 2025 next week—a move that bets in financial markets now strongly favor. Meanwhile, policymakers in the Asia-Pacific region are facing their own rates dilemmas. Bank of Japan Gov. Kazuo Ueda on Thursday said officials at the central bank are working to narrow a range for the neutral rate—the level viewed as consistent with economic stability—which would help inform the bank whether it needs to tighten policy. The yield on 10-year Japanese government bonds hit another milestone on Thursday, soaring to a more than 18-year high. And heightened speculation that the Reserve Bank of Australia could raise interest rates as early as February boosted Australian bond yields.

Private employers shed 32,000 jobs in November, ADP estimated, a swing from the 47,000 private-sector jobs that ADP estimated were added in October. Analysts surveyed by The Wall Street Journal were expecting to see 40,000 new private-sector jobs. 

ADP’s numbers, which come from the anonymized payrolls of ADP’s corporate clients, have long been on economists’ radar. Since October, though, they have taken on special importance given the vacuum of official economic data caused by the recent government shutdown.

The timing of Japan’s next shift in monetary policy appears to hinge on a hard-to-pin-down detail that fascinates economists: the so-called neutral level of interest rates. Figuring out what the neutral rate looks like is a tightrope many central banks are trying to walk, and the Bank of Japan's deliberations have implications for global markets that have recently shown themselves to be highly sensitive to the interest-rate debate in the world’s fourth-largest economy.

• Bond Yields in Japan Hit Highest Since 2007

Australian bond yields rose strongly Thursday on heightened speculation that the Reserve Bank of Australia could raise interest rates as early as February. Government bond yields were higher by 4-6 basis points across the yield curve, led by 3-year futures, trading at their highest since mid-January. The hawkish fervor comes amid a rush of stronger-than-expected demand indicators, which economists argue confirms that the RBA will face a problem trying to contain inflation early next year. Household spending jumped 1.3% in October, up from a 0.3% increase in September, and economic growth for the third quarter showed domestic demand rose sharply from the prior quarter. (Dow Jones Newswires)

There’s plenty of number crunching going on among economists at Australia’s big banks about the potential for an interest-rate increase as early as February.

The water-cooler chat has bubbled up as indicator after indicator points to frothy consumer spending, surging private-sector demand and a rise in inflation that will sour the pre-Christmas luncheon that the board of the Reserve Bank of Australia will no doubt enjoy at a policy meeting next week.

The European Union presented a plan to remove national barriers that stand in the way of a single market for financial services, which it sees as a key step to reviving the bloc’s faltering economy.

The European Commission, the bloc’s executive arm, said Thursday that the package of measures would eliminate barriers to trading and asset management.

It also seeks to remove regulatory barriers to distributed ledger technology, or digital systems for recording transactions and information across a network of participants.

Furthermore, it aims to centralize supervision of market infrastructure, such as central counterparties, which stand between buyers and sellers of financial instruments to mitigate risk.

8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
12 p.m.: Federal Reserve Vice Chair Michelle Bowman speaks at Florida Bankers Association Leadership Luncheon

8:30 a.m.: Personal Income and Outlays
10 a.m.: University of Michigan Survey of Consumers - preliminary
3 p.m.: Consumer Credit

The dollar is likely to recover in 2026 if increased U.S. productivity growth leads to capital flows, Standard Chartered strategists say in a note. Nonfarm business productivity and nonfinancial corporate productivity are both accelerating. "But identifying a shift in underlying productivity growth is extremely difficult, and we do not think the market has bought into the 'productivity surge' hypothesis yet." It could take some quarters of further productivity gains for markets to be convinced, especially with economic activity likely to be distorted by the recent government shutdown, they say. StanChart expects the euro to fall to $1.12 by end-2026 from $1.1662 currently, also citing the prospect of Germany's fiscal stimulus failing to boost the eurozone economy. — Renae Dyer

Markets are split on India's central bank rate call on Friday amid conflicting signals, says DBS economist Radhika Rao. The Reserve Bank of India's move will be dictated by the weight policymakers give to below-target inflation--which has left a sizeable real rate buffer--or the firm 2Q growth report, Rao says. DBS's base case is for a modest cut, premised on a FY 2026 inflation trajectory that is not only running 50 bps-60 bps below RBI projections but has undershot the 2%-6% target band. That said, the rupee's sharp move this week has injected uncertainty into the rate decision. Rao thinks the RBI will refrain from providing directional currency cues. "Announcements on potential open market operations might be made outside of the rate decision timeline." — Fabiana Negrinochoa

• Industrial output in the U.S. increased in September, partially retracing an August slump, the Federal Reserve said Wednesday.
• U.S. services-sector activity continued to rise in November, with signs of a recovery emerging despite lingering tariff concerns, a monthly survey said Wednesday.
• U.S. import prices were flat in September, with higher prices for nonfuel imports offsetting a fall in fuel import prices, Labor Department data showed Wednesday.
• Retail sales in the eurozone were unchanged in October, as sign that households remain wary of spending as the bloc looks to consumers to drive an economic recovery.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.