The Bureau of Labor Statistics has released its December 2025 Report, showing a labor market that continues to cool but remains relatively stable as the year came to a close. Both job growth and unemployment changed little in December, reinforcing a broader theme that defined much of 2025: slower hiring momentum paired with steady participation and wage growth.
Here’s what the latest data tells us about the labor market:
The great news is:
Healthcare hiring remains a consistent bright spot:
Health care added +21,000 jobs in December, including +16,000 in hospitals. While growth has slowed compared to 2024, the sector still averaged +34,000 jobs per month in 2025, making it one of the most reliable sources of employment gains.
Food services continue to add jobs:
Employment in food services and drinking places rose by +27,000 in December and averaged +12,000 jobs per month in 2025, closely matching 2024’s pace. This suggests continued demand despite tighter consumer spending.
Wages continue to rise:
Average hourly earnings increased $0.12 (+0.3%) in December to $37.02 and are up 3.8% year over year, outpacing inflation and supporting household income stability.
The good news is:
Unemployment remains relatively steady:
The unemployment rate held at 4.4% in December, with 7.5 million people unemployed. Rates across major demographic groups showed little to no change, pointing to overall labor market stability.
Participation levels remain flat but resilient:
The labor force participation rate edged slightly to 62.4%, while the employment-population ratio held at 59.7%. Both measures demonstrated minimal movement over 2025.
Short-term unemployment declined slightly:
The number of people unemployed for less than five weeks dipped to 2.3 million, signaling a marginal improvement in near-term job transitions.
The bad news is:
Overall job growth remains weak:
Total nonfarm payrolls increased by just +50,000 in December. For all of 2025, payroll employment rose by 584,000, a sharp slowdown from the 2.0 million jobs added in 2024.
Retail trade lost jobs:
Retail employment fell by -25,000 in December, with losses concentrated in general merchandise and food and beverage retailers. Retail has shown little net job growth in both 2024 and 2025.
Long-term unemployment is rising:
The number of workers unemployed for 27 weeks or more held at 1.9 million in December, but is up by 397,000 over the year. Long-term unemployed individuals now account for 26% of all unemployed workers.
Underemployment remains elevated:
5.3 million people are working part-time for economic reasons, nearly 1 million more than a year ago, reflecting continued pressure on full-time job availability.
Federal government employment continues to decline:
While federal employment was flat in December, it is down 277,000 (9.2%) since January, driven by deferred resignations and restructuring.
Final Takeaway
The December 2025 jobs report reinforces a picture of a labor market that is stable but clearly losing momentum. Hiring continues in essential service sectors like healthcare, social assistance, and food services, while overall job creation remains subdued. Wage growth is steady, but rising long-term unemployment and persistent underemployment point to ongoing structural challenges.
For employers, this environment underscores the importance of hiring with intention. With slower overall job growth and a growing pool of cautious, underutilized workers, success in 2026 will depend less on speed and more on making the right hires, improving retention, and ensuring strong role fit in a competitive but cooling labor market.