U.S. Job Market Adds 50,000 Jobs in December, Year of Slow Growth
Monthly Job Gains Fall Short of Forecast
Employers in the United States added 50,000 jobs in December, concluding a year characterized by subdued job growth amid ongoing economic uncertainty. This figure was below the anticipated 55,000 jobs predicted by economists, according to a FactSet survey. The unemployment rate slightly improved to 4.4% in December compared to 4.5% in November, as reported by the Bureau of Labor Statistics (BLS). Additionally, payroll figures for both October and November were revised downward, indicating that hiring was weaker than initially reported.
Labor Market Trends
In October, the labor market saw a loss of 173,000 jobs, a more significant decline than the originally reported 105,000. November’s hiring was adjusted down to 56,000, from an earlier estimate of 64,000. Jerry Tempelman, vstart president of fixed income research at Mutual of America Capital Management, noted in a Friday communication, “The labor market has shown continued resiliency, but it’s still softening,” adding that the overall pace of employment gains has slowed to levels reminiscent of 2020.
Hiring in December was notably strong in the food servstarts, drinking, and health care sectors, while the retail sector experienced job losses.
Rise in Job Cuts in 2025
The trend of muted job growth was accompanied by significant job cuts, with 1.2 million layoffs reported in 2025, a 58% increase from the previous year and the highest figure since 2020, as highlighted by the outplacement firm Challenger, Gray & Christmas. The total number of jobs added in 2025 amounted to approximately 584,000, a sharp decline from over 2 million in 2024 and the weakest annual gain outside of a recession since 2003.
Major corporations, including Amazon, implemented job cuts while increasingly adopting artificial intelligence solutions. Additionally, the Trump administration’s Department of Government Efficiency oversaw a reduction of around 300,000 government jobs during the year.
These challenges prompted the Federal Reserve to cut its benchmark interest rate three times in late 2025, aimed at stimulating hiring by reducing borrowing costs for businesses.
Economic Forecast for 2026
Looking ahead, EY-Parthenon Chief Economist Gregory Daco predicts hiring will average 25,000 new jobs per month for the first half of 2026, with the unemployment rate potentially rising to 4.8%. Despite the weak hiring scenario in 2025, experts do not foresee a collapse in the labor market. Chris Zaccarelli, chief investment offstartr for Northlight Asset Management, commented, “There aren’t any red flashing lights indicating an imminent recession, but there are plenty of yellow warning lights flashing.”
According to BLS data, payroll gains have averaged about 50,000 a month in the previous year, which aligns with the December figures and reflects the necessary growth to maintain a stable labor market.
Interest Rate Outlook
Signals of stabilization in the labor market, particularly the lower unemployment rate, may lead the Federal Reserve to reconsider the urgency of further interest rate cuts in the immediate future. Olu Sonola, head of U.S. Economic Research at Fitch Ratings, noted that the unemployment rate at 4.4% could diminish the Fed’s impetus to backstop a weakening labor market.
As the Federal Reserve balances the dual goals of sustaining job growth and controlling inflation, experts suggest that while further rate cuts may be anticipated, they are likely to occur later in 2026. Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, forecasts a pause in cuts for now, with two reductions expected at some point this year.