The U.S. labor market closed out 2025 on a weaker note, with job growth falling short of expectations even as unemployment edged lower. New data from the Bureau of Labor Statistics shows that employers added just 50,000 jobs in December, a clear slowdown from earlier in the year.
Economists surveyed by Dow Jones had expected closer to 73,000 new jobs. November’s payroll number was also revised lower, reinforcing concerns that businesses are becoming more cautious about hiring as economic uncertainty lingers.
Despite the weak job creation, the unemployment rate dipped to 4.4%, slightly better than forecasts. A broader measure of labor underuse—which includes discouraged workers and those working part time for economic reasons—also improved, falling to 8.4% from 8.7% the month before.
The household survey added another layer to the story. It showed employment rising by more than 230,000 people, even as labor force participation slipped to 62.4%. Taken together, the data suggests that while companies are adding fewer jobs, more people are still finding work.
Revisions to earlier months highlighted how soft 2025 was overall. October job losses were deeper than initially reported, and payroll growth for the year averaged just 49,000 jobs per month—far below the pace seen in 2024.
“Companies are slow to hire and slow to fire,” said Art Hogan, chief market strategist at B. Riley Wealth. He described the report as cautious but noted that it still contained more positive signals than negative ones.
Job gains in December were concentrated in services, led by restaurants, health care, and social assistance. Retail shed jobs following the holiday season, while government hiring remained minimal.
Wages continued to rise at a steady pace, with average hourly earnings up 3.8% from a year earlier. That steady income growth, combined with strong consumer spending and solid GDP estimates, suggests the broader economy remains resilient.
For the Federal Reserve, the message is mixed. Hiring is slowing, but the economy is not stalling. As 2026 unfolds, upcoming labor reports will play a key role in shaping decisions on interest rates and economic policy.
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