U.S. employment rose by just 50,000 jobs in December, missing economist expectations, amid losses in key sectors like retail and manufacturing. The unemployment rate fell to 4.4%, while wage growth held steady at 3.8% year-over-year. Businesses cited uncertainty from AI investments and tariffs as reasons for cautious hiring.
The Labor Department's Bureau of Labor Statistics reported on January 9 that nonfarm payrolls grew by 50,000 in December, following a downwardly revised increase of 56,000 in November. This fell short of the 60,000 jobs anticipated by Reuters-polled economists. The unemployment rate declined to 4.4%, revised from an expected 4.5%, signaling resilience in the labor market despite slowing momentum.
Job gains were limited to select industries. Leisure and hospitality added 27,000 positions, mainly in restaurants and bars. Healthcare saw a rise of 21,000 jobs, primarily at hospitals, though below the 2025 average of 34,000 monthly gains. Social assistance contributed 17,000 jobs. In contrast, retail lost 25,000 positions, manufacturing shed 8,000, and construction declined by 11,000. Economists link manufacturing losses to the Trump administration's tariff hikes, which the president defends as vital for reviving the sector.
Wage growth strengthened to 3.8% annually, up from 3.6% in November, supporting consumer spending. The 2025 labor market added only 584,000 jobs overall, averaging 49,000 per month—a sharp drop from roughly 2 million in 2024. Upcoming revisions may lower the 2024 figure further, with the bureau estimating 911,000 fewer jobs created through March 2025 due to issues in its birth-death model for tracking business openings and closures.
President Trump's Labor Department highlighted benefits for native workers, stating: “Under President Trump, we’re recovering from the economic disaster left by Joe Biden and AMERICANS are coming FIRST. Last year, ALL net job growth went to American-Born Workers in the Private Sector.” Some economists dispute this claim, though immigration policies have reduced foreign-born participation.
The Federal Reserve cut its benchmark rate to 3.50%-3.75% in December but signaled a pause on further reductions to assess economic trends. Experts describe the hiring slowdown as structural, driven by AI adoption and tariffs, potentially limiting the impact of monetary policy on job creation.
