Hiring in December was muted, though the unemployment rate inched down – a soft end to the 2025 labor market that revealed underlying signs of strain.
US employers added 50,000 jobs in December – a bit weaker than the already-slow monthly average gain of 55,000 in the first 11 months of 2025, the Bureau of Labor Statistics said Friday.
It missed expectations of 73,000 added jobs, according to Dow Jones estimates.
The unemployment rate fell to 4.4%, after hitting a revised 4.5% in November – though this was largely “noise” in the month-to-month measurement, according to Bill Adams, chief economist for Comerica Bank.
It is also difficult to quantify how the Trump administration’s deportation efforts are hitting the workforce, since foreign-born workers are likely responding to government surveys at a much lower rate than in 2024 amid the immigration crackdown, Adams said.
While the lower unemployment rate should ease some fears at the Federal Reserve, it appears unlikely to cut interest rates a fourth consecutive time at its meeting later this month, according to CME FedWatch.
Revisions to previous months painted a picture of a weaker labor market, as nonfarm payroll employment for October and November was revised down by a combined 76,000 jobs.
“In essence, we are seeing validation of the idea that job creation is very weak and companies have been letting workers go at a slow pace,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a note Friday.
“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.”
December’s job report is the first on-schedule release since September following a record-breaking government shutdown.
Fed Chairman Jerome Powell last month warned that figures should be viewed with a skeptical eye as they may be distorted by gaps in the data. Analysts have said it could take another month or two before reports normalize.
December’s report delivered some encouraging signs that the labor market isn’t cracking yet.
The number of people working part-time because they couldn’t find a full-time job dropped by nearly 150,000 in December – though the figure is up by nearly a million over the past year.
In total, employers added 525,000 jobs in 2025 according to the preliminary figure. That’s the slowest pace since the 2020 pandemic.
“Today’s mixed numbers point to a cautious start to the new year, not a setback. Last year closed with employers making careful, targeted hires and moving quickly when they did,” Ger Doyle, North America president at ManpowerGroup, an employment agency, said in a note Friday.
“For workers, job hugging is still the strategy, but confidence is slowly improving. Quits have ticked up since the lows in October and compensation for job switchers strengthened late in the year, which could encourage more movement. Layoffs remain low, signaling that employers are holding onto talent even as they hire selectively.”
Planned layoffs in December slumped to their lowest level in 17 months, according to a Challenger, Gray & Christmas report on Thursday.
The most drastic 2025 job losses hit federal government employment, as Elon Musk’s Department of Government Efficiency, or DOGE, purged workers earlier this year.
Government payrolls are down by 277,000 since hitting a peak in January 2024 – a loss representing 9.2% of the federal workforce.
Food and drinking, health care and social assistance industries all added jobs in December, up by 27,000, 21,000 and 17,000, respectively.
But construction, manufacturing, retail trade and professional and business services all saw declines.
President Trump has argued his tariffs will help bring manufacturing jobs back to the US. But the industry lost 8,000 jobs in December, and 68,000 over 2025.
The number of people jobless for 27 weeks or more changed little in December, but is up by 397,000 over the year.
While it has been a tough market for new graduates and others seeking jobs, firings have remained low and wage growth was steady at 3.8% in December – up slightly from 2024.
Consumer spending has remained resilient and gross domestic product, the standard measure of economic growth, expanded at a strong 4.3% pace in the third quarter of 2025.
