Employers added 50,000 jobs in December, notching a moderate gain for the economy but ending the worst year for the labor market since the pandemic-era recession.
The unemployment rate ticked down to 4.4 percent, according to Labor Department data released Friday, as layoffs remain low despite meager job creation.
However, 2025 marked the fewest jobs gained for workers since 2020 and the second worst year since the Great Recession. Employers added 584,000 jobs in 2025, an average of 49,000 jobs per month in 2025. That’s a significant drop from the 2 million jobs added over 2024 or 168,000 per month.
Job gains for October were revised down, showing the economy lost 173,000 jobs that month as tens of thousands of federal workers took a deferred resignation package. November job creation was also revised down slightly.
Meanwhile, wage growth picked up in December, beating inflation in a boost to workers’ pocketbooks. Average hourly wages have risen by 3.8 percent over the past 12 months, to $37.02 an hour.
“This was a miserable year for employment,” said Diane Swonk, chief economist at KPMG in an analyst’s note. “It’s a perfect storm of events. Over-hiring in the wake of the [pandemic] reopening which was a hiring frenzy. We’ve seen changes in trade and immigration policy both squeezed profit margin and limited the supply of workers and aging demographics. We’re just at the beginning of all that really starting to bite.”
Meanwhile, the unemployment rate climbed steadily this year, hitting a four-year high in November before dropping in December, partially due to workers exiting the labor market and the end of temporary layoffs related to the government shutdown in the fall.
The number of Americans who have been out of work for 27 weeks or more showed little change in December, at 1.9 million but has grown by 397,000 over the year.
“This is a very uncomfortable low unemployment rate,” said Swonk, noting that slow job creation means there isn’t much padding in the labor market if employers continue to hold off on hiring.
Economists had estimated that employers added some 73,000 jobs in December buoyed by a later-than-typical start to the holiday season and a hiring spree by federal law enforcement.
The December report marked the Bureau of Labor Statistics first on-time jobs report release since the government shutdown disrupted labor market data collection and releases.
Economists expect that annual revisions to federal jobs data scheduled for release next month will significantly downgrade job creation for last year.
Still, the modest jobs gains and improving unemployment rate should ease labor market concerns at the Federal Reserve. Fed officials cut interest rates at three consecutive meetings at the end of 2025, signaling that they are more focused on cushioning a softening job market than fighting still stubborn inflation. The Fed will meet next at the end of January.
“It looks like the Fed can be on a wait and see mode,” said Beth Ann Bovino, chief economist at U.S. Bank, citing stronger wage growth and falling unemployment.
December job creation was concentrated in health care, restaurants and bars and social services. Health care employers added 21,000 jobs, reflecting high demand from aging baby boomers.
Retail, manufacturing, construction, and professional and business services shed jobs in December. And payrolls in information, which includes tech, and the federal government remained flat.
But the federal government led job losses in 2025, with payrolls declining by 277,000, or 9.2 percent, since January, amid the Trump administration’s efforts to purge civil servants.
In 2025, the labor market weathered Trump administration policies better than expected by some economists and policymakers. Tariff and immigration enforcement policies are still rippling through the economy but layoffs appear to be contained for now, hitting a 17-month low in December, the consulting firm Challenger, Gray & Christmas reported Thursday.
Economists did not expect a December bump in job creation to make up for a year that became increasingly gloomy as the months progressed.
“It’s more difficult to get a job right now, because corporate America looks to be in an extended hiring pause,” said Joe Brusuelas, chief economist at RSM US. “The duration of unemployment is slowly rising.”
The number of job openings hit the lowest level in more than a year and hiring slowed in November, according to a separate jobs report released Wednesday by the Labor Department.
Black and teenage workers have been hit particularly hard. The unemployment rate for both groups has climbed sharply over the past 12 months to more than 7 percent for Black workers and more than 15 percent for teens in December. Rising joblessness for those groups often serves as a bellwether for a broader economic downturn.
“A lot of job openings are ‘ghost openings,’” said Dan North, senior economist for North America at Allianz Trade. “They’re positions that are posted that were never really meant to be filled unless a really awesome candidate comes along.”
The Trump administration’s aggressive immigration crackdown and deportation efforts could mean that fewer jobs are needed to keep the unemployment rate steady compared to previous years. Economists say it’s possible that around 50,000 jobs a month is enough to maintain a healthy labor market, as net immigration to the United States plummeted in 2025.
Brusuelas, the RSM economist, said that slowing job growth is also an effect of “the [hiring] pause that the corporate sector is engaged in as they assess the impact of their investment” in artificial intelligence. That could spell solid economic growth and corporate profits in 2026 even with a weak labor market.
“Corporations are rightsizing their workforce, and they’re being rewarded for it in terms of their stock share prices,” Brusuelas said. “I think this is where we’re going to be at for a good period of time.”
Fed Chair Jerome H. Powell warned in December that official statistics could be overstating job creation by 60,000 jobs a month, calling jobs data “a complicated, unusual and difficult situation.”
Abha Bhattarai contributed to this report.
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