Employers across the U.S. added 50,000 jobs in December, capping a year of muted job growth that saw employers pull back on hiring amid economic uncertainty.

The numbers
The monthly job gains were below the 55,000 forecast by economists, according to a poll by FactSet.

The unemployment rate stood at 4.4% in December, compared with 4.5% in November, the Bureau of Labor Statistics said Friday.

Payroll gains were revised downward for both October and November, a sign that hiring was weaker than previously reported in those months. The U.S. labor market lost 173,000 jobs in October, a larger decline than the earlier reported decline of 105,000 jobs, while November hiring was revised down to 56,000 from 64,000.

Employment change by industry
"The labor market has shown continued resiliency, but it's still softening, and the pace of year-to-date overall employment gains has slowed to the dragging pace of growth we saw in 2020," said Jerry Tempelman, vice president of fixed income research at Mutual of America Capital Management, in a Friday email.

In December, hiring was robust in food services and drinking, health care and social assistance, while the retail sector shed jobs, the BLS said.

Most layoffs since 2020
Employers announced 1.2 million job cuts in 2025, a 58% increase from the prior year and the highest level since 2020, outplacement firm Challenger, Gray & Christmas said Thursday.

Job growth slowed throughout 2025 as some businesses grappled with economic uncertainty, prompting them to pull back on hiring. Employers added a total of roughly 584,000 jobs in 2025, down sharply from more than 2 million the previous year and the weakest annual gain outside a recession since 2003, according to Oxford Economics.

Some big corporations, such as Amazon, cut jobs as they sought to rely more on artificial intelligence, while the Trump administration's Department of Government Efficiency oversaw the reduction of roughly 300,000 government jobs last year, Challenger, Gray & Christmas said.

The headwinds facing the labor market prompted the Federal Reserve to thrice cut its benchmark interest rate late last year, as lowering borrowing costs can help spur hiring by making it cheaper for businesses to expand.

Prior to the release of Friday's report, EY-Parthenon Chief Economist Gregory Daco said he is forecasting hiring will average 25,000 new jobs per month for the first half of 2026, while the unemployment rate could drift up to 4.8%.

What it means
While hiring was weak in 2025, experts don't think the labor market is collapsing.

"There aren't any red flashing lights indicating an imminent recession, but there are plenty of yellow warning lights flashing, and there is the risk that we could approach stall speed," said Chris Zaccarelli, chief investment officer for Northlight Asset Management, in a Friday research note.

Payroll gains averaged about 50,000 per month last year, according to BLS data, which is the amount the economy requires to maintain a stable labor market, according to Jamie Cox, managing partner at Harris Financial Group, which aligns with the December job gains and the average payroll gains throughout 2025.

Interest rate outlook
Signs of stabilization in the labor market — particularly a lower jobless rate — could lead the Federal Reserve to hit the brakes on interest rate cuts for now, according to some experts.

"For this report, all roads lead to the unemployment rate," said Olu Sonola, head of U.S. Economic Research at Fitch Ratings, in an email. "At 4.4%, it simply reads as relief versus 4.6% and it should douse the Fed's recent urgency to backstop a weakening labor market."

The Federal Reserve is tasked with maintaining strong hiring while also taming inflation. A weaker labor market picture in 2025 compelled the central bank to cut interest rates three times.

The upshot for 2026, experts say, is that rate cuts are coming, but they may arrive later in the year.

Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said in an email note that she expects a pause for now, but two cuts at some point this year.

Source