December NFP Shows Slower U.S. Job Expansion

U.S. nonfarm payrolls increased by 50,000 jobs in December, falling short of the forecasted 66,000 and following a downwardly revised gain of 56,000 in November (previously reported at 64,000).

The unemployment rate, however, declined to 4.4% last month from 4.5% in November (revised from 4.6%), slightly below the consensus estimate of 4.5%.

The slower-than-expected job growth in December reflects a cautious approach by businesses, driven by uncertainty over the impact of import tariffs on the labor market and rising investments in artificial intelligence.

The report suggests that the labor market remains under pressure after losing momentum in 2025, largely due to aggressive trade and immigration policies that have constrained both labor demand and supply.

Economists expect these headwinds to persist, with tariffs and technological shifts, particularly AI adoption, continuing to limit companies’ hiring capacity.

In December, the Federal Reserve cut its benchmark interest rate by 25 basis points to the 3.50%-3.75% range but signaled a likely pause in further reductions to assess the economy’s trajectory. Weakness in the labor market offsets positive developments in economic growth and worker productivity seen in the third quarter, reducing the effectiveness of rate cuts as a tool to stimulate employment.