Jobs Market Stays Soft in December, but Fed Rate Cuts Seen on Hold

The US economy closed 2025 with another weak showing on the hiring front. The Bureau of Labor Statistics reported that 50,000 jobs were added in December, largely in line with a consensus forecast for an increase of 55,000. That reading was essentially flat, alongside a downward-revised increase of 56,000 for November.

Meanwhile, the unemployment rate fell to 4.4% in December from 4.5% in November. The figure had been forecast to remain steady at 4.5%, according to FactSet.

“The labor market is likely still weakening, as measured by the nonfarm payroll employment figures,” says Preston Caldwell, senior US economist at Morningstar. “Although the signal is clouded by the downtick in unemployment in December compared with November.”

December Jobs Report Key Stats

• Total nonfarm payrolls rose by 50,000 after rising by 56,000 in November.
• The unemployment rate fell to 4.4% in December from 4.5% in November.
• In December, average hourly wages rose by 12 cents, or 0.3%, to $37.02.

A glimmer of positive news came from the December report, as the employment rate dipped to 4.4% from a downward-revised 4.5% in November. “The unemployment rate improved, suggesting November’s jump came from one-off DOGE-deferred resignations and data distortions, rather than a sign of systemic weakness,” says Lindsay Rosner, head of multi-sector fixed-income investing at Goldman Sachs Asset Management.

However, economists say the unemployment picture remains cloudy. “Household survey data continues to indicate that a contraction in labor supply is offsetting much of the drop in labor demand, keeping unemployment from rising more quickly,” Caldwell says. “This is plausible, given the immigration crackdown.”

Fed Rate Cuts On Pause Despite Weakening Jobs Picture

Even with the December jobs report showing a weak hiring environment, economists say Federal Reserve officials will likely move to the sidelines at the January meeting.

“Though Fed leadership is firmly focused on arresting any additional labor market weakness, this print should provide ammunition for the hawks advocating for more of a focus on inflation and a pause at the January meeting, which we now think will occur,” says Christopher Hodge, chief US economist at Natixis.

In the wake of the jobs report, bond futures traders nudged up the odds of no change in interest rates at the Fed’s January policy meeting to 95% from just under 87% on Thursday and roughly 70% a month ago. The Fed is also seen likely to keep rates steady at it’s March meeting, according to the CME FedWatch Tool.

“Today’s data shouldn’t significantly alter the Fed’s assessment of labor market conditions,” Caldwell says. “In line with the market, we expect the Fed to wait until the second quarter of 2026 to cut again. After cutting the federal-funds rate by 0.75 points in the fourth quarter of 2025, the Fed has less urgency to address downside risk in the labor market.”