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December payrolls rise modestly as 2025 hiring hits four-year low
The United States created only 50,000 jobs in December, capping a year in which monthly employment gains averaged the weakest since the pandemic, Labor Department figures released Friday show.
Annual hiring slowest since 2020
Employers added an average of 49,000 positions each month in 2025, a steep drop from the roughly two million jobs generated monthly in 2024. The December total fell short of economists' expectations and marked the smallest annual increase since the mass layoffs of 2020.
The Labor Department also revised downward its earlier estimates for October and November by a combined 76,000 jobs, further underscoring the cooling trend.
Sector shifts and policy backdrop
Retailers and manufacturers shed workers in December, while health-care providers, bars, and restaurants continued to hire. The uneven pattern reflects an economy still adjusting to President Donald Trump's policy overhaul-including tariffs, tighter immigration rules, and reduced federal spending.
Despite the hiring slowdown, the broader economy expanded at a 4.3% annual pace in the third quarter, fueled by resilient consumer spending and rising exports.
Unemployment dips but Fed remains divided
The jobless rate edged down to 4.4% in December from 4.5% in November, matching its level in September. The decline offered little clarity for Federal Reserve policymakers, who have already cut their benchmark interest rate three times since September to a three-year low of 3.6%.
Officials remain split over whether further reductions are needed, especially with inflation still above target. Analysts say the latest jobs report is unlikely to settle the debate.
"Today's report confirms what we think has been evident for some time-the labor market is no longer working in favor of job seekers," said Ellen Zentner, chief U.S. economist at Morgan Stanley Wealth Management. "Until the data provide a clearer direction, a divided Fed is likely to stay that way. Lower rates are likely coming this year, but the markets may have to be patient."
Ellen Zentner, Morgan Stanley Wealth Management
Outlook for 2026
With hiring momentum fading but layoffs still subdued, economists expect the Fed to proceed cautiously. Any further rate cuts will hinge on incoming data, particularly inflation readings and consumer spending trends.
