US job growth slows in December, while unemployment rate eases to 4.4%
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Workers in a Manhattan restaurant in New York City on Dec 16. The US labour market remained stuck in what economists and policymakers have called a “no hire, no fire” mode.
PHOTO: AFP
- US job growth slowed to 50,000 in December, below the expected 60,000, while the unemployment rate fell to 4.4 per cent.
- Factors such as import tariffs and AI investments contribute to business caution on hiring, creating a "no hire, no fire" situation.
- The BLS will revise payroll benchmarks in February 2026 and adjust its birth-death model to improve job gain/loss estimations.
AI generated
WASHINGTON – US job growth slowed more than expected in December amid business caution about hiring because of import tariffs and rising artificial intelligence (AI) investment, but the unemployment rate fell to 4.4 per cent, supporting expectations that the Federal Reserve would leave interest rates unchanged in January.
Non-farm payrolls increased by 50,000 jobs in December after rising by a downwardly revised 56,000 in November, the Labour Department’s Bureau of Labour Statistics (BLS) said on Jan 9.
Economists polled by Reuters had forecast 60,000 jobs added after a previously reported 64,000 increase in November.
The closely watched employment report suggested that the labour market remained stuck in what economists and policymakers have called a “no hire, no fire” mode. It also confirmed that the economy was in a jobless expansion.
Economic growth and worker productivity surged in the third quarter, in part attributed to the AI spending boom.
The labour market lost considerable momentum in 2025, largely blamed on President Donald Trump’s aggressive trade and immigration policies, which economists and policymakers said reduced both demand for and supply of workers.
The sharp moderation in job growth, however, started in 2024.
The BLS has estimated that about 911,000 fewer jobs were created in the 12 months through March 2025 than previously reported. The agency will publish its payrolls benchmark revision in February 2026 with the January employment report.
The overcounting has been blamed on the birth-death model, which is used by the BLS to estimate how many jobs were gained or lost because of companies opening or closing in a given month.
In December 2025, the BLS said it would, starting in January 2026, change the birth-death model by incorporating current sample information each month.
Together with the December employment report, the BLS published annual revisions to the household survey data for the past five years. The unemployment rate is calculated from the household survey.
The annual population control adjustments, normally incorporated with the January employment report, will be delayed. November’s unemployment rate was revised down to 4.5 per cent from the previously reported 4.6 per cent.
The median forecast in a Reuters poll of economists was for the jobless rate to have eased to 4.5 per cent in December.
Some economists say low supply has prevented a sharp rise in the unemployment rate. They estimated that between 50,000 and 120,000 jobs need to be created each month to keep up with growth in the working-age population.
The US central bank cut its benchmark interest rate by a quarter of a percentage point to the 3.5 per cent to 3.75 per cent range in December, but officials indicated that they were likely to pause further reductions in borrowing costs for now to get a better sense of the economy’s direction.
With factors like tariffs and AI preventing companies from hiring more workers, economists increasingly view the labour market’s challenges as more structural than cyclical, which would make rate cuts less effective to stimulate job growth. REUTERS
