US employers added fewer jobs than expected in December, capping a yearlong slowdown in the labor market defined by cautious hiring and limited layoffs.

Nonfarm payrolls increased 50,000 last month after downward revisions to the prior two months, according to Bureau of Labor Statistics data out Friday. The unemployment rate edged down to 4.4%, settling back after the record-long government shutdown.

The gradual cooling in the US labor market prompted the Federal Reserve to cut interest rates three straight times to close out 2025. While it was one of the weakest years for hiring since 2009, employers have also largely refrained from layoffs.

The December data also suggest the labor market remained fragile at the end of the year, and the outlook for hiring is guarded. Economists see another year of limited job opportunities and cooling pay gains, likely exacerbating voters’ affordability concerns going into this year’s midterm elections.

The jobs report is telling the “same kind of story we’ve been seeing from all the other data, which is it’s a labor market that’s weakening,” said Betsey Stevenson, a professor of public policy and economics at the University of Michigan. “We don’t see a lot of job growth, but that’s not translating into a lot of unemployment.”

Fed officials, who next meet later this month, are divided over how much further to lower rates this year. Traders maintained expectations that policymakers will hold rates steady at their January meeting, while the S&P 500 opened higher and two-year Treasury yields were up.

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The advance in payrolls was led by leisure and hospitality as well as health care, both of which drove job gains last year. Private payrolls increased by 37,000, just a fraction of what was seen in the same month a year earlier. Headcount fell in retail trade, construction and manufacturing.

President Donald Trump posted a chart on social media Thursday evening that included figures in the yet-to-be released December employment report. The White House didn’t provide comment.

The report offers a cleaner look at the underlying trend in hiring after the shutdown and deferred resignations of federal workers affected the numbers in the prior two months.

What Bloomberg Economics Says...

“December’s nonfarm payrolls showed tepid hiring, and downward revisions to past months’ data revealed that momentum has been weaker than thought... The December jobs report likely raised a few eyebrows at the Fed, but not enough to convince the FOMC to resume cutting rates.”

— Anna Wong, Eliza Winger and Chris G. Collins

The drop in the unemployment rate last month reflected fewer outright job losses as well as fewer people returning to the workforce. Jobless rates were lower among teenagers, Black Americans as well as those without a high school diploma.

The report included revisions to data in the survey of the jobs report that includes the unemployment rate going back to 2021. The adjustments were fairly minimal, still showing the unemployment rate climbed through the back half of last year and peaked at 4.5% in November.

The participation rate — the share of the population that is working or looking for work — ticked down to 62.4%. The rate for workers age 25-54, known as prime-age workers, held steady.

Meanwhile, the number of people who are long-term unemployed — or out of work for 27 weeks or more — climbed by nearly 400,000 last year, the most since 2020. Those working part time for economic reasons also had the biggest annual gain since the pandemic year.

Some other recent labor data, however, suggest signs of improvement. US companies announced fewer layoffs last month while planning more hiring, and American services providers registered the strongest growth in employment since February.

Even so, the vibe among consumers has been decidedly downbeat. Measures of confidence have been depressed in recent months — data out later Friday from the University of Michigan showed consumer sentiment climbed in recent weeks but is still hovering near a record low.

Separately, the employment report showed average hourly earnings rose 0.3% in December. Economists pay close attention to this metric as a driver of household spending, which has become more concentrated among the wealthiest Americans.

—With assistance from Chris Middleton, Jarrell Dillard, Julia Fanzeres, Vince Golle and Carter Johnson.

(Updates with University of Michigan consumer sentiment, Trump social post)

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