Hiring likely stayed modest in December, capping a year of weak job
growth
[January 09, 2026] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Hiring likely remained subdued last month as many
companies have sought to avoid expanding their workforces, though the
job gains may be enough to bring down the unemployment rate.
December's jobs report, to be released Friday, is likely to show that
employers added a modest 55,000 jobs, economists forecast. That figure
would be below November's 64,000 but an improvement after the economy
lost jobs in October. The unemployment rate is expected to slip to 4.5%,
according to data provider FactSet, from a four-year high of 4.6% in
November.
The figures will be closely watched on Wall Street and in Washington
because they will be the first clean readings on the labor market in
three months. The government didn't issue a report in October because of
the six-week government shutdown, and November's data was distorted by
the closure, which lasted until Nov. 12.
Another wrinkle: The economy lost 105,000 jobs in October, mostly
because federal government employment fell 162,000, reflecting a purge
of federal workers earlier last year by Elon Musk's Department of
Government Efficiency. That drop won't be repeated.
Still, sluggish hiring in December would underscore a key conundrum
surrounding the economy as it enters 2026: Growth has picked up to
healthy levels, yet hiring has weakened noticeably and the unemployment
rate has increased in the last four jobs reports.
Most economists expect hiring will accelerate this year as growth
remains solid. Yet they acknowledge there are other possibilities: Weak
job gains could drag down future growth. Or the economy could keep
expanding at a healthy clip, while automation and the spread of
artificial intelligence reduces the need for more jobs.
Economists do expect Friday's jobs report to have some good news, driven
partly by a rebound from the government shutdown, which likely drove a
higher unemployment rate in November. Still, should the rate remain at
4.6% or even tick higher, that would be a cause for concern.
“I’m really looking for a lot of that weakness to reverse in December,”
said Martha Gimbel, executive director of the Yale Budget Lab, “and if
it doesn’t, I am going to start getting much iffier about the labor
market."
Either way, December's report will cap a year of sluggish hiring,
particularly after “liberation day” in April when President Donald Trump
imposed sweeping tariffs on dozens of countries, though many were later
delayed or softened.
The economy generated an average of 111,000 jobs a month in the first
three months of the year. But that pace dropped to just 11,000 in the
three months ended in August, before rebounding slightly to 22,000 in
November.
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 Even those figures are likely to be
revised lower in February, when the government completes an annual
benchmarking of the jobs figures to an actual count of jobs derived
from companies' unemployment insurance filings. A preliminary
estimate of that revision showed it could reduce total jobs as of
March 2025 by 911,000.
And last month, Federal Reserve Chair Jerome Powell said that the
government could still be overstating job gains by about 60,000 a
month because of shortcomings in how it accounts for new companies
as well as those that have gone out of business. The Labor
Department is expected to update those methods in its report next
month.
Last November, the U.S. economy had just 770,000 more jobs than 12
months earlier, down from 1.9 million in the 12 months ending in
November 2024 and the smallest yearly gain since early 2021. The
benchmark revisions next month will likely reduce that figure even
further.
With hiring so weak, the Federal Reserve cut its key short-term
interest rate three times late last year, in an effort to boost
borrowing, spending, and hiring. Yet Powell signaled that the
central bank may keep its rate unchanged in the coming months as it
evaluates how the economy evolves.
Should December's jobs report come in surprisingly weak, it could
strengthen case for a rate reduction at the Fed's next meeting Jan.
27-28.
Even with such sluggish job gains, the economy has continued to
expand, with growth reaching a 4.3% annual rate in last year's
July-September quarter, the best in two years. Strong consumer
spending helped drive the gain. The Federal Reserve Bank of Atlanta
forecasts that growth could slow to a still-solid 2.7% in the final
three months of last year.
Many economists are optimistic that growth will pick up in 2026, in
part because Trump's tax legislation, approved last summer, should
lead to outsize tax refunds this spring. If growth does accelerate,
it's possible hiring may as well. At the same time, there are signs
that companies are using technology and other tools to make their
workers more efficient, which can spur growth without requiring more
jobs.
At the same time, inflation remains elevated, eroding the value of
Americans’ paychecks. Consumer prices rose 2.7% in November compared
with a year ago, little changed from the beginning of the year and
above the Fed’s 2% target.
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