Jobs report updates: US added fewer jobs in December than expected, but unemployment dropped

Nearly a million more people who wanted full-time roles ended up working part-time this year. Per BLS's definition, these are Americans who weren't clocking in full-time because their hours were cut back or they just couldn't find full-time roles.

In total, around 5.3 million people fell into this bucket; around 3.4 million were in that position due to slack work or business conditions, and around 1.5 million were only able to find part-time roles.

US stocks rose as traders took weaker-than-expected jobs growth last month, giving investors more confidence in expected rate cuts this year. All three benchmark indexes ticked higher leading into and following the jobs report, with the S&P 500 on track to end the day at a fresh record.

Here are the moves in major indexes in pre-market trading on Friday:

• S&P 500: 6,973.50, up 0.17%
• Dow Jones Industrial Average: 49,588.00, up 0.13% (+65 points)
• Nasdaq composite: 25,735.25, up 0.18%

Treasury yields rose after the report. The 2-year US Treasury yield ticked higher by one basis point, while 10-year yield was nearly flat.

Labor force participation dropped to 62.4% in December from 62.5% in November, and down from the 62.5% rate a year ago.

November's job growth of 64,000 was revised to 56,000, and October's job loss of 105,000 was revised to a larger loss of 173,000. The economy lost jobs in October mainly because federal workers who participated in the deferred resignation program in 2025 were no longer on the government payrolls.

The Bureau of Labor Statistics said these two months of revisions mean there were 76,000 fewer jobs than last reported.

Unemployment ticked down to 4.4% from November's revised 4.5%, previously reported at 4.6%. December's rate is just under the 4.5% expected.

The economy added 50,000 jobs last month, missing the expected 70,000 jobs.

Daniel Zhao, the chief economist at Glassdoor, told Business Insider on Wednesday that he will be looking to see how the unemployment rate changes.

"We do want to see the data for December to feel more confident in the trajectory of the labor market after a few months muddied by the government shutdown," he said. "So unemployment rate is definitely an important one. I think private payroll growth is also one to look at as well. There has been some evidence that private payroll growth was stabilizing after a sluggish summer last year."

Mark Hamrick, senior economic analyst at Bankrate, said in written commentary he expects "generally constrained hiring," adding that's been the employment landscape throughout the year. "Between the federal government shutdown and seasonal quirks including holiday hiring, it could be statistically noisy," Hamrick said.

Economists expect the US added 70,000 jobs in December and an unemployment rate of 4.5%.

In the slower job market, healthcare has been holding up, as it's less affected by cyclical changes, such as tariffs and fluctuations in consumer demand. Plus, there's a demand for healthcare workers as the population ages.

There were 0.9 opportunities per unemployed person in November, meaning fewer openings than unemployed. That's down from two openings per unemployed back in 2022, when there was a lot more job switching.

"We are still waiting to see a catalyst for the job market to open up again," Daniel Zhao, the chief economist at Glassdoor, said, adding 2025 had a lot of uncertainty, including tariff announcements and a record-long government shutdown.

Zhao said employers are still in a wait-and-see mode. "As interest rates come down and some of that uncertainty fades into the rear view, there is an opportunity for businesses to hire more in the new year, but it's certainly not a guarantee," he said.

Weekly jobless claims can help gauge whether companies are making big layoffs. New data published Thursday showed initial claims rose by 8,000 for the week ending January 3 to 208,000.

Economist Guy Berger said on X that it's comparable to the past few years, and there's "no measurable evidence of rising layoffs."

Federal Open Market Committee members will meet January 27 and 28 to decide what to do with the federal funds rate, which influences credit cards, car loans, and more. The Fed cut interest rates three consecutive times before 2025 ended, but many economists and traders don't expect another cut at the start of 2026.

CME FedWatch, which shows the probabilities of the interest rate outcome, showed an almost 90% chance before the new jobs report that the interest rate wouldn't be changed and a roughly 14% chance of a 25-basis-point cut.

The unemployment rate has been inching up, but it's still fairly low. Layoffs and discharges have also remained subdued, with a 1.1% rate in November, below the historical average of 1.4%.

Similarly, voluntary separations have been low. The quits rate, a signal of job-switching confidence, was 2% in November, similar to what it's been over the past year.

"For workers who are fed up with their current roles, they aren't willing to give up job security because they aren't confident that they'll be able to find something on the open market," Daniel Zhao, chief economist at Glassdoor, told Business Insider.

Over the past year, the economy has been falling back into a familiar — but worrying — form: a K.

In a K-shaped economy, higher earners sitting at the top chug along, although perhaps without the massive raises and opportunities of years past. But lower-earners at the bottom of the K have seen declining prospects, as the job opportunities and wage gains of the post-pandemic economy dissipate.

Today's report will show if that holds true, particularly in employment for lower-wage sectors and wage gains for those workers.

If the K gets wider, it might spell trouble ahead. Higher earners can prop up spending in the short run, shielding cracks by lower earners who might not have the same spending or earning power, but eventually those cracks may win out, pushing the economy into a downturn.

"Most of the consumption does happen by people who have more means," Federal Reserve Chair Jerome Powell said in a December press conference. "I think the top third accounts for way more than a third of the consumption, for example. So, it's a good question how sustainable that is."

Jed Kolko, senior fellow at the Peterson Institute for International Economics, said on X that the reasons behind the low hiring aren't necessarily due to artificial intelligence or the Trump administration's policies.

"Hiring has been very low since 2024, and has flattened out," Kolko said. "If it were AI, the hiring slowdown would have accelerated in 2025, rather than plunging earlier. If it were Trump policy, the slowdown would have started in 2025."

Sarah Foster, an economic analyst for Bankrate, told Business Insider the US has been in a jobless boom. "Companies are expanding profits, the stock market is doing well, the economy is growing at the fastest pace in nearly two years, but growth is not happening because companies are expanding their payrolls," she said in November, adding that employers are investing in "productivity-enhancing technologies," like artificial intelligence.

Business Insider has spoken with dozens of job seekers in the last year, and many have felt defeated during their job search. They suspect ageism, competition, and employers seeking the ideal candidate as some of the reasons they're unable to land a job.

New Bureau of Labor Statistics data published Wednesday showed the hires rate was 3.2% in November. Recent hires rates have looked similar to the slow recovery from the Great Recession in the early 2010s.

"The sluggish hires rate means that workers feel stuck in the jobs that they have, or they feel like they're being frozen out of the job market entirely, and that's been much of the case for the last one and a half to two years," Daniel Zhao, the chief economist at Glassdoor, told Business Insider.

Friday's jobs report is likely to be one of the key drivers of the day's stock market activity, and as is often the case before major economic data releases, activity is somewhat muted this morning.

Futures for all three major US stock indexes are virtually unmoved as of around 6:50 a.m. ET. At the time of writing, S&P 500 futures are 0.1% higher, Nasdaq futures are up 0.25%, and Dow Jones futures are as close to unmoved as possible, down 0.01%.

Elsewhere in markets, the rally in precious metals continues, with gold up 0.5% and nearing $4,500 per ounce. Silver has rallied more than 3% on Friday, while platinum is around 1.7% higher to $2,305 per ounce.

Right now, Democrats and Republicans have pretty different views of the economy — and, perhaps unsurprisingly, Democrats aren't feeling too hot. Of course, some of that is to be expected with a change in control of the White House, but there's a widening chasm in sentiment based on which party Americans align with.

Consumer sentiment among Democrats plunged since late 2024 and early 2025, according to data out of the University of Michigan's surveys of consumer sentiment, while Republicans started to feel a whole lot better about the economy once they knew Trump was taking office again. In recent months, though, all parties have seen noticeable plunges in how they feel about economic conditions; there was a slight recovery across the different groups in December, perhaps linked to the end of a bruising federal shutdown.

But workers across the country and political spectrum are particularly worried about what might happen if they lose their jobs. In the most recent reading of the New York Federal Reserve's Survey of Consumer Expectations, workers said that, if they lost their jobs today, the average probability of finding a role in the next three months was 43.1%. That's the lowest rate ever recorded since the New York Fed began tracking the measure.

Claudia Sahm, the chief economist of New Century Advisors, thinks the low-hire, low-fire state isn't sustainable. She told Business Insider in December that she thinks the job market will go in one of two ways.

One way: "We really slow down in terms of hiring, and we hit a place where the bottom falls out. And it's not just about slow hiring, it's about firing workers and a recession."

Second way: "The uncertainty lifts, they're ready to pick up hiring, and you see things really stabilize and kind of look more like a labor market that we've been more used to in terms of the job opportunities and adding workers."

Businesses have been skeptical about hiring or firing because of economic uncertainty, such as how tariffs would affect them and their consumers. Economists have also said businesses did a lot of hiring in the pandemic recovery period, so they might not have needed to add a lot more employees since then.

"At some point, if you want to grow as a company, you're going to have to bring in more workers," Sahm said.

The November report showed that unemployment reached 4.6%, the highest rate since September 2021. Unemployment has been at or above 4% since May 2024.

Meanwhile, the US added 64,000 jobs, largely due to the healthcare sector, which added 46,300 jobs. The construction sector added 28,000 jobs, and professional and business services added 12,000.

That report came late as a result of the government shutdown. Economists and others were excited to have November's jobs report, even if it was published in mid-December rather than December 5 to allow for more time collecting and processing data.

The report included some info from the previous month as well. BLS was able to still calculate October job growth and other estimates from the establishment survey, a survey of businesses and government agencies, following the shutdown.

October unemployment, labor force participation, and other estimates that rely on the household survey won't be able to be produced.

The Bureau of Labor Statistics will release its employment situation report this morning. The new data can be used to analyze how the job market has evolved over the past year in comparison to previous years.

Economists described the 2025 job market as being stuck in a low-hire, low-fire state.

"Job growth has been very slow over the course of 2025, and it doesn't seem like we've turned around quite yet to translate the pent-up demand for hiring and the recent increase in job openings into actual hires," Nicole Bachaud, an economist at ZipRecruiter, told Business Insider after the last jobs report was published on December 16.

The new report will also feature annual revisions to the household survey, used to calculate the unemployment rate.