New York City, January 10, 2026
The U.S. labor market experienced a slowdown in December, adding only 50,000 jobs and lowering the unemployment rate to 4.4%. This is the first decrease since June. Concerns arise as job growth for the year was the weakest since 2003, driven by cautious hiring amid economic uncertainties. Key sectors like leisure and hospitality saw gains, while retail suffered losses. The Federal Reserve’s interest rate cuts reflect the need to address these labor market challenges.
U.S. Job Growth Slows in December, Unemployment Rate Declines
New York City, NY – The U.S. labor market showed signs of slowing in December 2025, with employers adding 50,000 jobs and the unemployment rate decreasing to 4.4% from 4.5% in November. This marks the first decline in the unemployment rate since June. Despite the drop, the annual job growth for 2025 was the lowest in five years, raising concerns about the economy’s overall health.
December Job Growth and Unemployment Rate
In December, the economy added 50,000 jobs, slightly below economists’ expectations of 55,000. The unemployment rate fell to 4.4%, its first decrease since June. However, the annual job growth for 2025 was just 584,000, the weakest since 2003, excluding recessions. This slowdown is attributed to cautious hiring by businesses amid economic uncertainties, including tariff changes, inflation, and the rise of artificial intelligence.
Sector-Specific Employment Trends
Job gains in December were primarily in the leisure and hospitality sectors, with restaurants and bars adding 27,000 jobs, and healthcare adding 21,000. Conversely, the retail sector experienced a decline, shedding 25,000 jobs. Manufacturing, construction, and professional services also saw job losses, indicating a broader trend of sluggish hiring across various industries.
Factors Influencing Hiring Decisions
Businesses have been hesitant to hire due to several factors, including post-pandemic hiring surges leading to filled positions, uncertainties surrounding tariff policies, elevated inflation, and the potential impact of automation and artificial intelligence on job roles. These elements have contributed to a “low hire, low fire” environment, where hiring remains subdued, and layoffs are minimal.
Federal Reserve’s Response and Economic Outlook
In response to the weakening labor market, the Federal Reserve has cut interest rates three times in 2025. The Congressional Budget Office projects that the Fed will continue to reduce rates in 2026, with the federal funds rate reaching 3.4% by the end of President Donald Trump’s term in 2028. Despite these cuts, 10-year Treasury yields are expected to rise slightly, indicating potential increases in mortgage rates.
Conclusion
The December job report highlights a continued slowdown in the U.S. labor market, with modest job gains and a slight decrease in the unemployment rate. While certain sectors show resilience, the overall economic outlook remains cautious, prompting ongoing monitoring by policymakers and economists.
Frequently Asked Questions (FAQ)
What was the unemployment rate in December 2025?
The unemployment rate in December 2025 was 4.4%, down from 4.5% in November.
How many jobs were added to the U.S. economy in December 2025?
Employers added 50,000 jobs in December 2025, slightly below economists’ expectations of 55,000.
Which sectors experienced job gains in December 2025?
Job gains in December were primarily in the leisure and hospitality sectors, with restaurants and bars adding 27,000 jobs, and healthcare adding 21,000.
What factors are influencing businesses’ hiring decisions?
Businesses are hesitant to hire due to post-pandemic hiring surges leading to filled positions, uncertainties surrounding tariff policies, elevated inflation, and the potential impact of automation and artificial intelligence on job roles.
What is the Federal Reserve’s response to the current labor market trends?
The Federal Reserve has cut interest rates three times in 2025 and is expected to continue reducing rates in 2026, with the federal funds rate projected to reach 3.4% by the end of President Donald Trump’s term in 2028.
Key Features of the U.S. Job Market in December 2025
| Feature | Details |
|---|---|
| Unemployment Rate | 4.4%, down from 4.5% in November. |
| Job Growth | 50,000 jobs added in December, below economists’ expectations of 55,000. |
| Annual Job Growth | 584,000 jobs added in 2025, the weakest since 2003, excluding recessions. |
| Sector Performance | Leisure and hospitality sectors added 27,000 jobs; healthcare added 21,000; retail sector lost 25,000 jobs. |
| Federal Reserve Actions | Three interest rate cuts in 2025; projected to reach 3.4% by 2028. |
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