The job market stepped back from the cliff's edge
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Illustration: Sarah Grillo/Axios
The good news in the December jobs numbers out this morning is in what didn't happen. Employment didn't flatline or go negative. The unemployment rate didn't continue an inexorable rise.
The big picture: At times last year, the wheels appeared to be coming off the U.S. labor market. But the final 2025 employment data points more to stagnation than to further deterioration.
- The job market may not be thriving, but it isn't falling off a cliff, either.
- That will give the Federal Reserve confidence that further interest rate cuts are not needed imminently — such as at its policy meeting later this month — to arrest some steep deterioration in labor market conditions.
Driving the news: The unemployment rate ticked down to 4.4% in December, from a revised 4.5% in November. The share of adults who are employed ticked up.
- The 50,000 jobs added to payrolls last month is weak compared with the last several years, but likely reflects the new normal in an era of deportations, restrictionist immigration policy and the baby boom generation retiring.
By the numbers: There was a steep negative revision on previous months' payrolls, particularly a 68,000 reduction in the October estimate that now shows 173,000 jobs lost that month.
- DOGE buyouts, however, were the cause of those weak October numbers, with federal government employment falling by 179,000, more than 100% of the losses.
- The average of 53,000 jobs added in November and December is a notch better than the average payrolls growth over the summer months, when job creation came to a near-halt.
Yes, but: The employment trends continued to be exceptionally weak in many of the sectors that are cyclical drivers of economic activity, suggesting soft underlying demand.
- Manufacturing employment fell by 8,000 jobs, the eighth straight month of decline. Retail employment fell by 25,000 jobs, the third consecutive negative month, indicating softer-than-usual holiday hiring.
- By contrast, the biggest job gains were in health care and social assistance (38,500 jobs added) and leisure and hospitality (47,000).
What they're saying: "For this report, all roads lead to the unemployment rate," wrote Olu Sonola, head of U.S. economic research at Fitch Ratings. "At 4.4%, it simply reads as relief versus 4.6%," which was the pre-revision November estimate.
- "That said, the weak headline job growth story can't be brushed aside," he added. "Hiring is still stuck in stall speed, and job growth in the cyclical parts of the economy aren't sending a comforting signal."
Of note: There were particularly steep drops in unemployment among some groups that had seen joblessness rise most in 2025.
- The rate among workers with less than a high school diploma fell by 1.2 percentage point, and the rate for Black Americans dropped by 0.7 percentage point.
The bottom line: This is no longer a robust job market. But as of December, it has stabilized in a low-job-growth, stable-unemployment equilibrium.
