U.S. Payrolls Rose by 50K in December, Unemployment Fell

U.S. employers reported adding 50,000 jobs in December 2025 and the unemployment rate fell to 4.4%, according to the latest employment report from the U.S. Bureau of Labor Statistics (BLS), released Jan. 9.

Overall, employers added 584,000 new jobs in 2025 — or about 49,000 jobs a month, on average, a marked deceleration from 2024, when two million jobs were added at a pace of 168,000 a month.

Employment figures for October were revised down by 68,000 jobs to -173,000, and November’s total was revised down by 8,000 jobs to 56,000.

“The report caps off a historically weak year for the labor market, with the economy adding barely enough jobs to keep pace with population growth,” said Nicole Bachaud, labor economist at ZipRecruiter. “Aside from 2020, this is the lowest annual job growth since 2009.”

Daniel Zhao, chief economist at Glassdoor, said that the latest BLS report capped a turbulent 2025. “Uncertainty spiked as tariffs and a government shutdown rattled the economy,” he said.

The sharp moderation in job growth last year has been attributed to many things, but chief among them is the Trump administration’s trade and immigration policies, which economists and policymakers said reduced both demand for and supply of workers.

“Private payroll growth, [not counting the federal workforce reductions] however, was a more solid 733,000 jobs added during 2025,” Zhao said. “The gap highlights the large job losses in the government sector, particularly due to the federal government’s hiring freeze, layoffs and deferred resignation program. Federal government employment shrank by 274,000, the largest single-year decline since 1946.”

But even accounting for the federal workforce cuts and restricted immigration levels, private payroll growth weakened throughout the year as hiring appetite diminished, said Sam Kuhn, an economist at Appcast.

“When government policy rapidly shifts, often businesses hold back on hiring and investment decisions,” he said.

“Health care alone accounted for roughly 69% of all job growth across 2025,” Bachaud said. “The reliance on a single industry to keep job growth positive uncovers the unstable foundation in play going into 2026. Economic uncertainty is rocking business decisions and undercutting the effectiveness of the Fed’s recent rate cuts.”

Laura Ullrich, director of economic research at the Indeed Hiring Lab, said that nothing in the BLS data points toward significant, near-term change. “That said, a low-hire, low-fire environment can’t last forever in a growing economy,” she said. “While a long-stagnant labor market might not be as directly alarming as an obviously broken one, it can still feel quite broken for many job seekers.”

Heading into 2026, economists forecast a labor market that is not dramatically different than what was experienced in 2025. Indicators point to continuity rather than disruption, with job openings, hiring, and unemployment hovering near current levels. The most likely scenario is a prolonged “low-hire, low-fire” environment marked by caution, uneven demand across industries, and persistent policy uncertainty.

Ger Doyle, regional president, North America at ManpowerGroup, said that his company’s data shows employers making careful, targeted hires. “Companies are prioritizing roles that drive revenue, operations, and technology, and job postings are staying open for less time than two years ago,” he said. “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. If demand stabilizes and confidence builds, we could see momentum broadening beyond business-critical roles into areas that support growth and innovation.” 

Amy Glaser, senior vice president at Adecco, said that as 2026 begins, “we expect continued demand across sectors like health care, offering opportunities across a wide range of skills sets and experience levels. Overall, our outlook remains cautiously optimistic as employers position themselves for sustainable growth.”

This month’s report is the first on-time release since the BLS data collection was paused by the 43-day government shutdown last fall. Questions have arisen over the data gaps from the shutdown, with some economists expecting the first unhampered report to be released in February.

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Industry Breakdown

December’s job growth was concentrated in the health care and leisure and hospitality sectors.

Employment in restaurants and bars trended up in December with 27,000 new jobs. These establishments added an average of 12,000 jobs per month in 2025, similar to the average increase of 11,000 jobs per month in 2024.

Health care employers added 21,000 jobs, with a gain of 16,000 jobs in hospitals. Retail trade lost 25,000 jobs in December.

“December showed continued strength in health care and continued weakness in business and professional services and manufacturing,” Ullrich said. “Indeed data shows job postings remain elevated in almost all health care occupations but are below pre-COVID levels in sectors including human resources, marketing and data and analytics,” she said. “This highly concentrated job growth only helps to further sideline and lengthen the job hunt for job seekers looking for work outside of the small handful of growing sectors.”

Zhao noted that manufacturing lost 68,000 jobs in total over 2025 and ended the year on an eight-month streak of consecutive job losses.

The tech industry, and more broadly white-collar hiring, also struggled immensely in 2025, Kuhn said. “Elevated interest rates from 2023 onwards have weighed heavily on these industries, but several rate cuts by the Fed in 2025 may open a path towards modest growth in the new year,” he added.

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Unemployment Falls, Long-Term Jobless a Growing Concern

The unemployment rate ticked down last month to 4.4% from November’s revised 4.5%, although it slowly drifted up from 4% a year ago.

“The December drop in unemployment helps soothe fears that unemployment was poised for an upward surge at the end of 2025,” Zhao said. “The slow and steady rise, however, is a concern that economists will be watching closely in 2026.”

A more encompassing underemployment measure that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 8.4%, down 0.3 percentage point from November.

“The number of people employed part-time for economic reasons surged to 5.3 million, up 980,000 over the year,” Bachaud said. “These workers would prefer full-time positions but have been forced into part-time arrangements due to reduced hours or inability to find full-time work. This increase suggests employers are increasingly reluctant to commit to full-time hiring even as they maintain some level of staffing.”

Another concerning condition is the increase in people falling into the long-term unemployment category (being unemployed for 27 weeks or more), which now affects 1.9 million workers. That number rose by almost 400,000 people in 2025.

“The long-term unemployed now represent 26% of all unemployed people, up from 24.3% in November, indicating unemployment is increasingly becoming a permanent state rather than a temporary transition,” Bachaud said.

“Job seekers are clearly struggling in this labor market,” Kuhn said. “Some of this may be explained by the government shutdown, yet it’s clear workers are taking longer to find new jobs.”

Wage Growth Remains Above Inflation

Average hourly earnings for private-sector workers in December rose by 12 cents, or 0.3 percent, to $37.02. Over the past 12 months, average hourly earnings have increased by 3.8 percent.

“That is still modestly ahead of inflation but with the gap continuing to narrow,” Bachaud said. “As wage growth trends toward convergence with inflation in early 2026, workers will lose the real income gains that have provided some cushion over the past two years.”