The U.S. economy created fewer jobs than expected in December, although a modest decline in the unemployment rate reinforced expectations that the Federal Reserve will keep interest rates unchanged at its upcoming meeting.
Nonfarm payrolls increased by 50,000 last month, easing from November’s revised figure of 56,000. Economists had forecast job growth of around 66,000, according to consensus estimates.
Previous data were also revised downward. November’s initial payroll figure of 64,000 was cut, while October’s employment decline was revised lower by 68,000 to a loss of 173,000, the Bureau of Labor Statistics said.
As a result of these revisions, combined employment for October and November was 76,000 lower than previously reported. The BLS attributed the changes to additional data received from businesses and government agencies, as well as updates to seasonal adjustment factors.
At the same time, the U.S. unemployment rate edged down to 4.4%, compared with expectations that it would remain at November’s revised level of 4.5%. Analysts at ING have suggested that this metric may carry more weight for policymakers than headline job creation.
Commenting on the report, Kathy Jones, chief fixed income strategist at Charles Schwab, said the data point to a labor market that appears largely stagnant. She noted that labor force participation has weakened, with recent figures showing subdued hiring and firing activity as businesses remain cautious.
Companies are increasingly weighing the impact of sweeping U.S. tariffs alongside the growing influence of artificial intelligence, leading many employers to delay staffing decisions.
In response to signs of softening in the labor market, the Federal Reserve cut interest rates multiple times last year, even as inflation remained persistent. Lower borrowing costs are intended to support investment and economic activity, though they also carry the risk of reigniting price pressures.
According to the CME Group’s FedWatch tool, investors are currently pricing in two additional rate cuts later this year. However, expectations remain fluid. Following the payrolls release, markets assigned a probability of just over 97% that the Fed will keep rates unchanged within the 3.50%–3.75% range at its January meeting.
Stephen Brown, deputy chief North America economist at Capital Economics, said the decline in unemployment and revisions to seasonal factors suggest the labor market is in slightly better shape than some more dovish policymakers had feared. As a result, he argued, the Fed is unlikely to rush back into cutting rates.
Friday’s report also marked a return to a regular publication schedule for U.S. employment data, following disruptions caused by a prolonged government shutdown that led to an extended blackout of official statistics late in 2026.
