U.S. job growth slows in December
Payroll gains miss forecasts as unemployment dips to 4.4%
U.S. job growth slowed in December as the Labor Department’s report showed employers added 50,000 nonfarm payrolls—well below economists’ expectations—while the unemployment rate edged down to 4.4%, indicating a still-firm labor market despite softer hiring. The slowdown was concentrated in construction, retail and manufacturing, with factory losses widely linked by analysts to the administration’s tariff policies. Wage growth remained solid enough to keep markets and policymakers attentive to inflation risks and the likely path for interest rates.
Economists described the figures as evidence of a labor market rebalancing rather than a sharp downturn: higher borrowing costs and tighter financial conditions have damped demand for workers, yet layoffs have been limited and joblessness has not risen meaningfully. Some observers pointed to structural shifts in employment, including increased automation and adoption of AI-driven processes, as contributing to lower demand for traditional manual and service roles even as productivity gains support continued economic expansion.
The report fueled debate over policy drivers: critics argued that aggressive trade and immigration measures have constrained both labor supply and demand, exacerbating sectoral job losses, while proponents of tariffs maintain they aim to revive domestic manufacturing. Market participants read the data as consistent with a slowing but orderly economy, reinforcing expectations that the Federal Reserve may hold interest rates steady at its upcoming meeting while monitoring incoming labor-market signals for signs of sustained disinflation.
Analysts warned that upcoming monthly reports will be pivotal in determining whether job growth stabilizes at this softer pace or slips further. For now, the combination of modest payroll gains, a lower unemployment rate and continued wage pressure paints a mixed picture: the labor market has cooled from earlier strength but remains resilient, leaving policymakers to weigh the trade-offs between sustaining the recovery and curbing inflation without tipping the economy into recession.
