December Jobs - Hiring Subdued but Unemployment Lower

Still slowly slowing. U.S. employers added fewer jobs than expected in December suggesting the labor market continued to “slowly slow” through the end of the year. December payroll gains totaled 50K, in line with the full year average, but below forecasts for +70K. The unemployment rate moved slightly lower to 4.4% – down from 4.5% (revised) in November and up from 4.1% when the year began. While hiring remains sluggish, thus far, employers have largely refrained from laying workers off. Fed policymakers implemented three 0.25% rate cuts in 2025 to support a “gradually cooling” labor market noting risks of a further slowdown. While policymakers are divided on whether or not more cuts are needed in 2026, today’s report could argue for additional accommodation in the year ahead. As it stands, investors are pricing in two cuts in 2026, while the median Fed forecast calls for one.

50K jobs added in December. The U.S. labor market added 50k jobs in December down from +56K (revised) in November and below expectations for +70K. In addition, October figures were revised downward to -173K compared to -105K originally reported. For the full year of 2025, job gains averaged just under 50K per month compared to expectations for +121K per month when the year began and compared to average monthly gains of +167K in 2024. Job gains trended higher in food service (+27K), health care (+21K) and social assistance (+17K) partially offset by a decline in retail (-25K). Federal government employment was little changed in December but is down 277K (9.2%) since reaching a peak in January. Employment showed little change in other major industries.
4.4% unemployment – down 0.1% month-over-month. The U.S. unemployment rate registered 4.4% in December, down from 4.5% (revised from 4.6%) in November and below expectations for 4.5%. The total number of unemployed people was little changed in the month and the labor force participation rate fell slightly to 62.4% from 62.5% in November.