Research
January 09, 2026
Total U.S. jobs
Job growth slowed in second half of 2025, while the unemployment rate edged lower in December
The U.S. economy added 50,000 nonfarm payroll jobs in December, marking the third increase in the past four months. Even so, the labor market has softened considerably. Revisions to October and November data lowered previous estimates by a combined 78,000 jobs. For the second half of 2026, nonfarm payrolls grew by just 87,000, far below the 1.1 million gain in the same period of 2025 and the 497,000 increase in the first half of this year. In short, job growth has slowed to a near standstill despite modest gains in the final two months.
On a more encouraging note, total employment rose to 163.99 million, a new record. As such, even with recent weaknesses, the U.S. economy has demonstrated surprising resilience over the past few years, navigating multiple headwinds and an uncertain policy environment. However, the recent softening in labor market conditions could challenge the prevailing narrative of post‑pandemic strength. Steady employment and wage growth have been key drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Restaurant operators are closely monitoring labor trends as they seek to drive traffic and sales, especially given the recent softness. At the same time, while challenges remain, there are also positive indicators that could support performance in the sector, reflecting mixed economic signals overall. Labor market developments will be critical to watch in the coming months as businesses adapt to evolving economic and policy dynamics.
The unemployment rate inched down from a revised 4.5% in November to 4.4% in December. The number of unemployed individuals decreased from 7.78 million in November to 7.50 million in December.
The labor force participation rate edged down from 62.5% in November to 62.4% in December, the lowest since August. As such, this continues a trend seen over much of this year that more individuals have moved to the sidelines of the labor market this year.
Average hourly earnings for private-sector production and nonsupervisory workers edged up 0.1% in December, with 3.6% growth over the past 12 months. That was the slowest year-over-year growth rate since May 2021, reflecting continued moderation but at a still-solid pace. Indeed, labor cost pressures have slowed significantly from the recent peak of 7.0% in March 2022.
Job growth in December was mixed but mostly lower. The largest employment gains were in leisure and hospitality (including eating and drinking places), private education and health services, local government, and financial activities. In contrast, there were notable declines in trade, transportation, and utilities (including retail trade), construction, professional and business services, and the goods sectors of construction, manufacturing and mining. Below is a detailed breakdown of December’s employment changes by sector, ranked from highest to lowest:
On a more encouraging note, total employment rose to 163.99 million, a new record. As such, even with recent weaknesses, the U.S. economy has demonstrated surprising resilience over the past few years, navigating multiple headwinds and an uncertain policy environment. However, the recent softening in labor market conditions could challenge the prevailing narrative of post‑pandemic strength. Steady employment and wage growth have been key drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Restaurant operators are closely monitoring labor trends as they seek to drive traffic and sales, especially given the recent softness. At the same time, while challenges remain, there are also positive indicators that could support performance in the sector, reflecting mixed economic signals overall. Labor market developments will be critical to watch in the coming months as businesses adapt to evolving economic and policy dynamics.
The unemployment rate inched down from a revised 4.5% in November to 4.4% in December. The number of unemployed individuals decreased from 7.78 million in November to 7.50 million in December.
The labor force participation rate edged down from 62.5% in November to 62.4% in December, the lowest since August. As such, this continues a trend seen over much of this year that more individuals have moved to the sidelines of the labor market this year.
Average hourly earnings for private-sector production and nonsupervisory workers edged up 0.1% in December, with 3.6% growth over the past 12 months. That was the slowest year-over-year growth rate since May 2021, reflecting continued moderation but at a still-solid pace. Indeed, labor cost pressures have slowed significantly from the recent peak of 7.0% in March 2022.
Job growth in December was mixed but mostly lower. The largest employment gains were in leisure and hospitality (including eating and drinking places), private education and health services, local government, and financial activities. In contrast, there were notable declines in trade, transportation, and utilities (including retail trade), construction, professional and business services, and the goods sectors of construction, manufacturing and mining. Below is a detailed breakdown of December’s employment changes by sector, ranked from highest to lowest:
- Leisure and hospitality: +47,000 (eating and drinking places: +27,200)
- Private education and health services: +41,000
- Local government: +18,000
- Financial activities: +7,000
- Other services: +5,000
- Federal government: +2,000
- Information: no change
- Mining and logging: -2,000
- State government: -7,000
- Manufacturing: -8,000
- Professional and business services: -9,000
- Construction: -11,000
- Trade, transportation, and utilities: -33,000 (retail trade: -25,000)