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The U.S. economy added only 50,000 jobs in December, below expectations, the latest sign that the labor market is cooling after years of strong growth.
Friday’s figure from the Bureau of Labor Statistics fell short of the 70,000 expected by economists surveyed by Bloomberg. However, the unemployment rate unexpectedly fell to 4.4 percent from 4.6 percent in November.
The data provide the most complete picture of the U.S. jobs market for several months, after the November and October releases were heavily impacted by the government shutdown.
The November figure was revised down to 56,000 on Friday from an initial reading of 64,000.
US short-term Treasury yields rose slightly after the report showed a lower-than-expected unemployment rate for December. The two-year yield, which tracks expectations for monetary policy, rose 0.03 percentage points to 3.52 percent.
The data release provides evidence of a downturn in the labor market, hit by federal government workforce cuts and a slowdown in private sector hiring.
The Federal Reserve has cut U.S. borrowing costs at each of its last three meetings, keeping its benchmark target range at a three-year low of 3.5 to 3.75 percent.
Fed Chair Jay Powell signaled in December that the prospects for further rate cuts were high, saying borrowing costs were now in a “good place.”
Economists said the surprise drop in unemployment would strengthen the case for the US central bank to halt the rate-cutting cycle at its next meeting later this month.
“Goodbye, January! The Fed will likely stay on course for now as the labor market shows temporary signs of stability,” said Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management. “We expect the Fed to remain on hold for now, but will still pencil in two cuts for the rest of 2026.”
The Fed has also raised concerns about the accuracy of recent BLS data, with Powell arguing that the US economy is adding 60,000 fewer jobs a month than the jobs report claims.
This is a developing story
