US Non Farm Payrolls for December 2025 Show Slower Job Growth Amid Economic Uncertainty
December 2025 Non Farm Payrolls rose by 50,000 jobs, missing the 60,000 estimate and down from November’s 64,000. This slowdown reflects ongoing labor market cooling amid tighter monetary policy and external risks. Wage growth remains moderate, while sectors like leisure and hospitality continue to lead gains. The data signals cautious optimism but raises questions about growth momentum in early 2026.
Table of Contents
The US Non Farm Payrolls (NFP) report for December 2025, released on January 9, 2026, recorded an increase of 50,000 jobs, according to the Sigmanomics database. This figure fell short of the consensus estimate of 60,000 and declined from November’s 64,000 gain. The report covers the entire US labor market excluding farm workers, private household employees, and non-profit organization staff, providing a broad measure of employment trends.
Drivers this month
- Leisure and hospitality added approximately 18,000 jobs, maintaining sector strength.
- Healthcare employment grew by 12,000, reflecting ongoing demand.
- Manufacturing and construction sectors showed marginal gains, each adding around 5,000 jobs.
- Retail trade employment was flat, signaling cautious consumer spending.
- Government payrolls declined slightly by 3,000, reflecting budgetary constraints.
Policy pulse
The December reading suggests a cooling labor market consistent with the Federal Reserve’s tightening monetary policy stance. The Fed’s rate hikes over 2025 aimed to moderate inflation without triggering a sharp recession. The slower job growth aligns with the Fed’s goal of reducing labor market overheating, though the pace remains positive enough to avoid immediate recession fears.
Market lens
Following the release, US Treasury yields on the 2-year note rose modestly by 5 basis points, reflecting renewed expectations for sustained Fed vigilance. The US dollar index (DXY) strengthened by 0.30%, while equity markets showed mixed reactions, with the S&P 500 edging down 0.20% amid uncertainty over growth prospects.
December’s 50,000 job gain compares to a 12-month average monthly increase of approximately 90,000 jobs, highlighting a marked slowdown. For context, the US added 119,000 jobs in September 2025 and 73,000 in August 2025, indicating a downward trend in employment growth over the past several months. Year-over-year, December 2025’s gain is down from 143,000 jobs added in December 2024.
Wage growth and unemployment
Average hourly earnings rose by 0.30% month-over-month in December, slightly below the 0.40% average of the prior three months. The unemployment rate held steady at 3.70%, near historic lows but showing signs of stabilization. Labor force participation remained unchanged at 62.50%, suggesting limited new entrants into the workforce.
Sectoral shifts
Service sectors continue to dominate job creation, with leisure, hospitality, and healthcare leading. Manufacturing and construction gains remain modest, reflecting supply chain normalization but cautious capital spending. Retail’s flat employment signals consumer caution amid inflationary pressures and higher interest rates.
Fiscal policy context
Government budget constraints and reduced fiscal stimulus have contributed to slower public sector hiring. The US federal budget deficit narrowed slightly in Q4 2025, but ongoing debt ceiling negotiations and spending caps limit expansive fiscal support for growth.
This chart underscores a labor market transitioning from robust expansion to moderate growth. The downward trend suggests that while the US economy remains resilient, momentum is fading. This dynamic will be critical for policymakers balancing inflation control with growth support in 2026.
Market lens
Immediate reaction: The US dollar strengthened 0.30% post-release, while 2-year Treasury yields rose 5 basis points, reflecting increased expectations for continued Fed rate vigilance. Equity markets showed mild volatility, with the S&P 500 dipping 0.20% amid growth concerns.
Looking ahead, the labor market faces several key risks and opportunities. The Federal Reserve’s monetary policy trajectory remains the dominant factor influencing employment growth. If inflationary pressures persist, further rate hikes could slow hiring further, raising recession risks. Conversely, if inflation eases faster than expected, the Fed may pause tightening, supporting steadier job gains.
Scenario analysis
- Bullish (20% probability): Inflation moderates rapidly, Fed signals pause, and job growth rebounds to 80,000+ monthly gains.
- Base case (60% probability): Moderate growth continues with monthly job gains around 40,000–60,000, unemployment stable near 3.70%.
- Bearish (20% probability): Persistent inflation forces more rate hikes, pushing job growth below 20,000 and unemployment rising above 4%.
External shocks & geopolitical risks
Global uncertainties, including supply chain disruptions and geopolitical tensions, particularly in energy markets, could weigh on US economic activity and hiring. Trade policy shifts and international conflicts remain downside risks that could dampen business confidence.
Structural & long-run trends
Long-term labor market trends such as automation, demographic shifts, and evolving work patterns continue to reshape employment. The gradual rise in remote work and gig economy participation may affect traditional payroll metrics, complicating interpretation of headline NFP figures.
December 2025’s Non Farm Payrolls report confirms a labor market in transition. Job growth is slowing but remains positive, reflecting a balancing act between inflation control and economic resilience. Policymakers and market participants will closely watch upcoming data for signs of either renewed strength or further cooling.
Given the current environment, investors should prepare for continued volatility in interest rates and equity markets. The interplay of monetary policy, fiscal constraints, and external risks will shape the US economic trajectory in 2026.
Key Markets Likely to React to Non Farm Payrolls
The US Non Farm Payrolls report is a critical economic indicator that influences a range of financial markets. Equity indices, currency pairs, bond yields, and even cryptocurrencies often react sharply to the data, reflecting shifts in growth expectations and monetary policy outlook.
- SPX: The S&P 500 index typically moves in response to NFP surprises, reflecting investor sentiment on economic growth.
- USDEUR: The US dollar versus euro pair is sensitive to US labor data, impacting currency valuations and trade flows.
- USDJPY: This pair often reacts to shifts in US interest rate expectations driven by payroll data.
- BTCUSD: Bitcoin prices can reflect risk appetite changes following major economic releases like NFP.
- TSLA: Tesla’s stock is sensitive to economic growth signals given its exposure to consumer demand and capital markets.
FAQs
- What does the US Non Farm Payrolls report indicate?
- The US Non Farm Payrolls report measures monthly employment changes excluding farm workers, providing insight into labor market health and economic growth.
- How does the December 2025 NFP figure compare historically?
- December’s 50,000 job gain is below the 12-month average of 90,000 and marks a slowdown from previous months, signaling cooling labor market momentum.
- Why is the NFP report important for investors?
- The NFP report influences monetary policy expectations, currency valuations, and equity market sentiment, making it a key data point for investment decisions.
Sources
- Sigmanomics database, US Non Farm Payrolls data, January 9, 2026 release.
- US Bureau of Labor Statistics (BLS) historical employment data.
- Federal Reserve monetary policy statements and economic projections.
- US Treasury yield curve data.
- Market reaction data from Bloomberg and Reuters.
The December 2025 Non Farm Payrolls figure of 50,000 jobs marks a decline from November’s 64,000 and is well below the 12-month average of 90,000. This slowdown is evident in the monthly trend chart, which shows a steady tapering of job gains since mid-2025.
Comparing the last six months, job growth peaked at 228,000 in April 2025 before gradually declining to the current subdued pace. The chart highlights a clear deceleration trend, consistent with tighter monetary policy and cautious business sentiment.