US Labor Market Update: Payroll Growth Cools, Wage Pressures Stay Firm (December 2025) & Markets' Reactions.

December’s labor report showed slower job growth but firm pay gains. Nonfarm payrolls rose just 50K, with private hiring at 37K and manufacturing still contracting. Government jobs improved, while unemployment edged down to 4.4% as participation slipped. Average weekly hours eased, yet wages stayed sticky—up 0.3% m/m and 3.8% y/y—keeping inflation pressures alive despite softer hiring.

author: Ahura Chalaki

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published:Jan 9, 2026 9:56

category:fundamental

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The U.S. labor market sent a mixed but market-relevant signal in December: job creation slowed more than expected, while wage growth stayed firm and the headline unemployment rate edged lower. Nonfarm payrolls rose +50K (vs +66K expected, +56K prior), with private payrolls at +37K (vs +64K expected, +50K prior). Manufacturing remained a weak spot, with payrolls down -8K (vs -5K expected, -2K prior), while government hiring improved to +13K (prior +6K). The unemployment rate ticked down to 4.4% (vs 4.5% expected, 4.5% prior), even as participation slipped to 62.4% (prior 62.5%) and average weekly hours eased to 34.2 (vs 34.3 expected/prior). On the inflation side of the labor report, wages were sticky: average hourly earnings rose +0.3% m/m (in line with expectations; prior +0.2%) and accelerated to +3.8% y/y (vs 3.6% expected, 3.6% prior), keeping compensation growth uncomfortably firm despite softer hiring momentum.