The US job market ended 2025 on a soft note, with job creation in December below expectations, according to a report released Friday by the Bureau of Labor Statistics.
Non-agricultural payrolls rose a seasonally adjusted 50,000 for the month, lower than November’s downwardly revised 56,000 and below the Dow Jones estimate of 73,000.
At the same time, the unemployment rate fell to 4.4%, compared to a forecast of 4.5%.
A broader measure including discouraged workers and those in part-time employment for economic reasons fell to 8.4%, down 0.3 percentage points from November. The household survey, used to calculate unemployment figures, showed an increase of 232,000 while the participation rate fell slightly to 62.4%.
The report presents a blurry picture of the labor market, with businesses reporting low hiring but households seeing employment gains.
Stock futures markets gained after the release while Treasury yields were flat.
Additionally, the revisions lowered previous months’ totals. November’s total saw a slight downward revision of 8,000 in the employment count, while October’s loss was even larger than initially reported, now at 173,000 from the previous estimate of 105,000.
For the full year, payroll gains averaged 49,000 per month, compared to 168,000 in 2024, according to the BLS.
“The jobs report is mixed, with both positives and negatives,” said Art Hogan, chief market strategist at B. Riley Wealth. “We continue to see an environment where companies are slow to hire and fire. The main takeaway from today’s report is that there is more good news than bad in the first on-time jobs report in three months.”
Previous reports were delayed due to the government shutdown, which caused data collection and reporting to be suspended during the 43-day standoff.
Restaurant and bar jobs led the month, up 27,000, while health care added 21,000 and welfare rose 17,000. Retail trade reported a decline of 25,000. The government added only 2,000 jobs for the month.
The average hourly wage rose 0.3% for the month, in line with forecasts, although the 3.8% annual increase was 0.2 percentage points higher than expected.
Federal Reserve officials have been closely monitoring the employment situation for guidance on future interest rate developments.
The annual payroll gain of 584,000 for 2025 is the worst year outside of a recession since 2003, according to Heather Long, chief economist at Navy Federal Credit Union.
“It’s fair to say that 2025 was a hiring recession in the United States,” Long wrote. “The United States is experiencing an unemployment boom where growth is strong, but hiring is not. It’s a great scenario for Wall Street, but a bad feeling for Main Street.”
Although some were calling for more rate cuts on top of the three cuts approved by the Fed late last year, the economy appeared to be in pretty good shape at the end of a tumultuous year.
The Atlanta Fed’s rolling measure of incoming economic data shows gross domestic product increasing at an annualized rate of 5.4% in the fourth quarter. This follows a third quarter in which the broad measure of growth increased at a rate of 4.3%.
Additionally, consumers, who fuel two-thirds of the $31 trillion U.S. economy, spent heavily during the holiday season. Adobe estimates that online spending increased 6.8% from last year to a record $257.8 billion.
Markets expect the Fed to remain status quo for a period after the succession of cuts that began in September. The next reduction is not expected until June, although that could change following the jobs report.
