The U.S. labor market ended 2025 on a weak note, with job creation lower than expected in December, according to a report released Friday by the Bureau of Labor Statistics.
Nonfarm payrolls increased by a seasonally adjusted 50,000 jobs in the month, falling short of November’s downwardly revised figure of 56,000 and falling short of the Dow Jones forecast of 73,000.
At the same time, the unemployment rate fell to 4.4% versus the expected 4.5%.
The more comprehensive measure, which includes disengaged workers and those in part-time work for financial reasons, fell to 8.4%, down 0.3 percentage points from November. The household survey, used to calculate the unemployment rate, showed an increase of 232,000 people, while the labor force participation rate fell slightly to 62.4%.
The report paints a murky picture of the labor market, with businesses reporting low levels of employment, but households showing an increase in employment.
Stock market futures rose on the announcement, but U.S. Treasury yields stabilized.
Additionally, due to the revision, the previous month’s total decreased. While the November total was slightly revised downward to 8,000 jobs, the drop in October was even larger than originally reported, at 173,000 compared to the previously expected 105,000.
The average monthly payroll increase for the full year was 49,000 jobs, compared to 168,000 jobs in 2024, according to the BLS.
“The jobs numbers are mixed, both good and bad,” said Art Hogan, chief market strategist at B. Riley Wealth. “Companies continue to be in an environment where hiring and firing are slow. The most important thing about today’s report is that there is more good news than bad news in the first three-month report on regular employment numbers.”
Previous reports were delayed because the government shutdown disrupted data collection and reporting during a 43-day impasse.
The month was led by restaurant and bar employment, which added 27,000 jobs, followed by health care, which added 21,000, and social assistance, which added 17,000. The retail sector reported a decrease of 25,000 jobs. The government added just 2,000 jobs that month.
The average hourly wage for the month increased by 0.3%, which was in line with expectations, but the annual increase of 3.8% exceeded expectations by 0.2 percentage points. Average weekly working hours decreased slightly to 34.2 hours.
Federal Reserve officials are closely monitoring the employment situation for guidance on future interest rate trends.
Annual employment growth in 2025 will be 584,000 jobs, the worst year since 2003, excluding recessions, said Heather Long, chief economist at Navy Federal Credit Union.
“It is no exaggeration to say that 2025 will be an employment recession in the United States,” Long wrote. “The U.S. is in the midst of an unemployment boom, with growth strong but employment not. It’s a great scenario for Wall Street, but there’s a sense of unease on Main Street.”
Despite the Fed’s three policies approved late last year, as well as calls for further rate cuts, the economy appears to be in pretty good shape as a tumultuous year comes to an end.
Future economic data from the Atlanta Fed shows that gross domestic product (GDP) will grow at an annualized rate of 5.4% in the fourth quarter. This follows a third-quarter result in which the broader growth measure rose 4.3%.
Additionally, consumers, who support two-thirds of the $31 trillion U.S. economy, spent heavily during the holiday season. Adobe estimates that online spending rose 6.8% year over year to $257.8 billion, a record high.
The market expects the Federal Reserve to keep policy unchanged for a certain period of time following a series of interest rate cuts that began in September. The next round of cuts are not factored in until June, but that could change following the release of employment data.
This report caps off a tumultuous year for BLS. In August, President Donald Trump fired former Secretary of State Erica McEnterfer and replaced her with William J. Wiatrowski, enraged by the company’s weak July pay report and major revisions from the previous month.
In addition, the closure created challenges for the agency in collecting data. Markets are hoping that the January report will provide a clearer picture of the labor situation.
