U.S. Employment (December 2025)

Payrolls rise by 50k in December, while the unemployment rate ticks down to 4.4% 

• Non-farm payrolls rose by 50k in December, slightly below the consensus forecast of 70k. Job gains for the two prior months were revised lower by a total of 76k. The bulk of the downward revisions were concentrated in October (-68k), coinciding with the government shutdown. 
  • For 2025, the economy added 584k jobs, well below the 2.0 million added the year prior. 
• Private payrolls added 37k new positions last month, down slightly from the 50k reported in November. Jobs gains were concentrated in leisure & hospitality (+47k) and health care & social assistance (+38.5k). Meanwhile, retail trade (-25k), construction (-11k), professional & business services (-9k), and manufacturing (-8k) all recorded jobs losses. Government added 11k. 
• In the household survey, the unemployment rate ticked down to 4.4% (previously 4.5%) as civilian employment (+232k) rose while the labor force (-42k) was slightly lower. The labor force participation rate ticked down to 62.4% (from 62.5% in November). 
  • The Bureau of Labor Statistics also revised its seasonal adjustment factors for 2025, which were small on balance, but did lower November's unemployment rate to 4.5% (previously reported at 4.6%). 
• Average hourly earnings rose 0.3% month-on-month (m/m), following an upwardly revised 0.2% m/m gain (previously 0.1% m/m) in November. Relative to December 2024, wages are up 3.8% (from 3.6% in November).

Key Implications

• The labor market appears to have stabilized at the end of last year. Smoothing through volatility, private payrolls have largely steadied in recent months while the unemployment rate ticked down from its cycle high reached in November. But make no mistake, the combination of big policy changes and a significant ramp-up in AI investments resulted in a measurable softening in the job market last year, with the economy adding only a third of the jobs was created in 2024.  
• This morning's report should provide policymakers with further reassurance that the labor market is stabilizing, supporting the case for a "pause" on rate cuts. Market pricing on Fed futures were little changed following the release, with the next rate cut not fully priced until June.

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