I wonder if there is a bug in Outlook 2016, or possibly JAWS (and NVDA, too).
When I open a Contact Group, whether with a screen reader on or not, I can easily navigate through each and every member with the up and down arrow buttons. The difference being that the screen reader is not tracking that movement up and down through the list at all corresponding to where Outlook itself has focus at that moment, which is odd.
I cannot imagine this behavior is intentional, and since it's occurring in NVDA, and it sounds like the same thing is happening in JAWS, I wonder if Outlook 2016 is somehow not exposing the fact that you've changed focus from one row/member to another in the list of members of a Contact Group.
Brian - Windows 10 Home, 64-Bit, Version 1809, Build 17763
Explanations exist; they have existed for all time; there is always a well-known solution to every human problem — neat, plausible, and wrong.
~ H.L. Mencken, AKA The Sage of Baltimore