U.S. Job Growth Slows in December as Hiring Cools, Unemployment Drops to 4.4%

The U.S. labor market closed out 2025 with weaker-than-expected job growth, even as unemployment ticked lower. New data from the Bureau of Labor Statistics shows that employers added only 50,000 jobs in December, falling short of expectations and underscoring how hiring momentum slowed late in the year.

Economists surveyed by Dow Jones had expected job growth closer to 73,000. November’s payroll figure was also revised lower to 56,000, adding to concerns that employers remain cautious about expanding their workforce.

Unemployment Falls Despite Slower Hiring

Even with modest hiring, the unemployment rate slipped to 4.4%, slightly better than the 4.5% economists had forecast. A broader measure of labor underuse which includes discouraged workers and those working part time for economic reasons also improved, dropping to 8.4% from 8.7% in November.

Household survey data showed employment rising by 232,000, though labor force participation edged down to 62.4%. Together, the figures paint a mixed picture: fewer jobs being created by businesses, but more people reporting they are working.

Revisions Highlight a Soft Year

The December report also included notable revisions. October job losses were deeper than first reported, now showing a decline of 173,000 jobs instead of 105,000. Overall, payroll growth in 2025 averaged just 49,000 jobs per month, well below the 168,000 monthly average seen in 2024.

Art Hogan, chief market strategist at B. Riley Wealth, described the data as balanced but cautious. “Companies are slow to hire and slow to fire,” he said, adding that the report still contained “more good news than bad.”

Where Jobs Were Added—and Lost

Hiring in December was uneven across sectors:

• Restaurants and bars led gains with 27,000 new jobs
• Health care added 21,000
• Social assistance grew by 17,000

On the downside, retail lost 25,000 jobs, reflecting post-holiday pullbacks, while government hiring remained limited with just 2,000 additions.

Wages continued to grow at a steady pace. Average hourly earnings rose 0.3% for the month, matching expectations. On an annual basis, wages increased 3.8%, slightly above forecasts, though the average workweek dipped to 34.2 hours.

What It Means for the Economy and Rates

Federal Reserve officials are closely watching labor data as they weigh the next steps for interest rates. Despite the weak hiring trend, broader economic indicators remain strong. The Federal Reserve Bank of Atlanta estimates that U.S. GDP grew at a 5.4% annual pace in the fourth quarter, following solid growth in Q3.

Consumer spending also held up. Adobe estimates online holiday sales jumped 6.8% from a year earlier to a record $257.8 billion, helping support overall economic growth.

Markets currently expect the Federal Reserve to pause on rate cuts for several months, with the next potential reduction not anticipated until June. Still, analysts say future decisions could shift if labor market weakness deepens.

With data collection now back on track after last year’s government shutdown, economists expect upcoming reports to offer a clearer view of whether the labor market is stabilizing or slowing further as 2026 unfolds. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.