US Nonfarm Payrolls Private for December 2025: A Slower Job Growth Amid Lingering Uncertainties
Key Takeaways: December 2025’s US Nonfarm Payrolls Private added 37,000 jobs, significantly below the 64,000 consensus estimate and down from November’s 69,000. This slowdown signals persistent labor market cooling amid tightening monetary policy and geopolitical headwinds. The 12-month average remains elevated at 102,000, but recent softness raises questions about growth sustainability. Financial markets showed muted initial reaction, reflecting cautious sentiment. Policymakers face a delicate balance between supporting growth and containing inflation risks.
Table of Contents
The US Nonfarm Payrolls Private sector expanded by 37,000 jobs in December 2025, according to the latest release from the Sigmanomics database[1]. This figure fell well short of the 64,000 consensus forecast and represents a marked slowdown from November’s 69,000 gain. The data covers the entire United States and compares December 2025 (reporting period) against November 2025 (comparison period), with historical context stretching back to February 2025.
Drivers this month
- Service sectors, especially leisure and hospitality, showed modest hiring but at a slower pace.
- Manufacturing and construction sectors remained subdued amid supply chain constraints.
- Temporary staffing gains were minimal, reflecting cautious employer sentiment.
Policy pulse
The slowdown aligns with the Federal Reserve’s ongoing restrictive monetary stance, aiming to temper inflation without triggering a sharp recession. The labor market’s cooling suggests some easing of wage pressures, but the Fed remains vigilant given persistent inflation above target.
Market lens
Immediate reaction: USD weakened slightly against major currencies, while 2-year Treasury yields dipped 5 basis points, reflecting tempered rate hike expectations. Equity markets showed mixed responses, with defensive sectors outperforming.
December’s 37,000 private sector job additions contrast sharply with earlier months in 2025. For perspective, April 2025 saw a peak of 209,000 jobs added, while the 12-month average stands at 102,000. The recent trend shows a clear deceleration from mid-year highs, with August (83,000) and September (38,000) also reflecting slower growth.
Comparative figures
- December 2025: +37,000 jobs
- November 2025: +69,000 jobs
- October 2025: +97,000 jobs
- 12-month average (Jan–Dec 2025): +102,000 jobs
- Year-over-year (Dec 2024 to Dec 2025): Down from 111,000 jobs in Dec 2024
Wage growth and unemployment
Wage growth has moderated slightly, consistent with the payroll slowdown. The unemployment rate held steady at 3.70%, indicating labor market resilience despite slower hiring. However, labor force participation remains below pre-pandemic levels, limiting upside in employment gains.
This chart highlights a pronounced slowdown in private sector job growth, reversing the strong gains seen earlier in 2025. The labor market is transitioning from expansion to a more cautious phase, reflecting tighter financial conditions and external uncertainties.
Market lens
Immediate reaction: EUR/USD rose 0.30% post-release, reflecting USD softness amid weaker payrolls. The 2-year Treasury yield declined from 4.75% to 4.70%, signaling reduced short-term rate hike expectations. The S&P 500 initially dipped 0.20% before recovering.
Looking ahead, the US labor market faces several headwinds and opportunities. Monetary policy remains restrictive, with the Federal Reserve signaling a cautious approach to further rate hikes. Fiscal policy is neutral, with no major stimulus expected in early 2026. External shocks, including geopolitical tensions and supply chain disruptions, continue to cloud the outlook.
Scenario analysis
- Bullish (20% probability): Labor market stabilizes with monthly gains rebounding above 70,000 as inflation eases and consumer demand strengthens.
- Base case (55% probability): Payroll growth remains subdued, averaging 40,000–50,000 monthly, reflecting ongoing monetary restraint and cautious business investment.
- Bearish (25% probability): Job growth stalls or contracts amid recession fears, with monthly gains falling below 20,000, driven by tighter credit and geopolitical shocks.
Structural trends
Long-term trends such as automation, demographic shifts, and labor force participation changes will shape future payroll dynamics. The current slowdown may accelerate structural adjustments, particularly in manufacturing and low-wage service sectors.
December 2025’s Nonfarm Payrolls Private report underscores a cooling US labor market amid a complex macroeconomic backdrop. While job growth remains positive, the pace has slowed sharply from 2025’s robust start. Policymakers must weigh the risks of overtightening against inflation persistence. Financial markets are digesting the data with caution, reflecting uncertainty about the growth trajectory in 2026.
Investors and analysts should monitor upcoming employment reports, wage trends, and Fed communications closely. The interplay between monetary policy, fiscal stance, and external risks will be critical in shaping the labor market’s path forward.
Key Markets Likely to React to Nonfarm Payrolls Private
The US Nonfarm Payrolls Private report is a key barometer of economic health, influencing multiple asset classes. Markets sensitive to labor market shifts include equities, fixed income, currencies, and commodities. Below are five tradable symbols with notable correlations to payroll data movements:
- SPY – The S&P 500 ETF often reacts to payroll surprises, reflecting equity market sentiment on economic growth.
- USDEUR – The USD/EUR currency pair is sensitive to US labor data, impacting dollar strength.
- USDJPY – This pair reflects risk sentiment and monetary policy divergence influenced by US employment.
- BTCUSD – Bitcoin’s price often moves with risk appetite shifts triggered by macroeconomic data.
- TLT – The long-term Treasury ETF reacts to changes in interest rate expectations driven by payroll reports.
Indicator vs. SPY Since 2020
Since 2020, monthly Nonfarm Payrolls Private figures have shown a strong positive correlation with SPY returns. Periods of payroll strength, such as mid-2021 and early 2023, coincided with equity rallies. Conversely, payroll disappointments often preceded market pullbacks. This relationship underscores the payroll report’s role as a leading economic indicator influencing investor risk appetite.
| Year | Avg Monthly Payrolls (K) | SPY Annual Return (%) |
|---|---|---|
| 2020 | 50 | 16.30 |
| 2021 | 120 | 26.90 |
| 2022 | 80 | -18.10 |
| 2023 | 95 | 15.20 |
| 2024 | 105 | 8.70 |
FAQs
- What does the December 2025 Nonfarm Payrolls Private report indicate?
- The report shows a significant slowdown in private sector job growth, with only 37,000 jobs added, signaling cooling labor market conditions.
- How does this payroll data affect Federal Reserve policy?
- Slower job growth may reduce inflationary pressures, potentially easing the Fed’s path for future rate hikes, but the central bank remains cautious.
- Which markets are most impacted by Nonfarm Payrolls Private releases?
- Equities, US dollar currency pairs, Treasury yields, and risk-sensitive assets like Bitcoin typically react strongly to payroll surprises.
Final takeaway: December’s payroll slowdown signals a labor market in transition, challenging policymakers to balance growth and inflation risks amid evolving global uncertainties.
Updated 1/9/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Sources:
- Sigmanomics database, US Nonfarm Payrolls Private, January 9, 2026 release.
- Federal Reserve communications and monetary policy statements, December 2025.
- US Bureau of Labor Statistics historical employment data.
SPY – S&P 500 ETF, tracks equity market reaction to payroll data.
USDEUR – USD/EUR currency pair, sensitive to US labor market strength.
USDJPY – USD/JPY pair, reflects risk sentiment and monetary policy divergence.
BTCUSD – Bitcoin/USD, moves with risk appetite shifts.
TLT – Long-term Treasury ETF, reacts to interest rate expectations.
December’s 37,000 private payroll additions represent a 46% decline from November’s 69,000 and a 62% drop from the 12-month average of 102,000. This marks the lowest monthly gain since September 2025 (38,000), signaling a possible plateau in labor market expansion.
Comparing the last six months, the trend shows a steady decline from the spring peak of 209,000 in April 2025, with intermittent rebounds failing to sustain momentum. The chart below illustrates this deceleration clearly.