Modest jobs gain in December signals even cooler labor market

The U.S. labor market continues to slow with the economy adding just 50,000 nonfarm payroll jobs in December, according to data released Friday by the U.S. Bureau of Labor Statistics (BLS). 

In addition to the modest jobs gain, the November jobs number was revised downward to 56,000, which is 8,000 below the previous estimate.

The unemployment rate remained fairly stable, declining slightly to 4.4% from 4.6% in November, with 7.5 million people unemployed.

Sectors that showed notable job gains in December include food services and drinking places (+27,000 jobs), health care (+34,000 jobs) and social assistance (+17,000 jobs). 

On the other end of the spectrum, the retail trade sector lost 25,000 jobs in December. 

Residential building construction lost 4,200 jobs in December, although employment for residential specialty trade contractors rose by 1,100 jobs. The real estate sector also posted a small increase, adding 2,300 jobs in December. 

“Most sectors actually saw the number of jobs decline in December,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement. “Healthcare and leisure and hospitality drove the monthly gain last month.”

When it comes to the housing market, Sturtevant said this data is indicative of increased economic uncertainty among consumers. 

“The 2026 housing market is going to be a tug-of-war between improved affordability and growing economic uncertainty. Mortgage rates are at their lowest level in 15 months, home price growth is slowing and inventory is on the rise. These trends point to improved affordability and could bring more homebuyers into the housing market.” Sturtevant said.

“But today’s jobs report highlighted a new dynamic to the housing market — increased economic anxiety. When people feel uncertain about their own financial situations, they are going to be much more cautious about making big decisions, such as buying or selling a home.”

But with so much pent-up demand, Sturtevant said it is still unclear which side will win this tug of war. 

As for the Federal Reserve, whose next meeting is scheduled for the end of this month, economists feel this data supports a potential pause in rate cuts. 

“For the Federal Reserve, this mix supports a cautious pause at the January FOMC meeting, especially with officials split between inflation-focused hawks and more growth- and jobs-focused doves,” Sam Williamson, a senior economist at First American, said in a statement.

“Having delivered three quarter-point cuts late last year, officials appear inclined to give those moves time to work through the system before making additional adjustments.”

Mike Fratantoni, chief economist at the Mortgage Bankers Association, shared a similar perspective. 

“This report is fairly neutral with respect to its implications for the housing and mortgage markets,” Fratantoni said in a statement. “It reinforces the sense that the economy is slowly growing but does not increase the urgency for additional rate cuts.”

Williamson believes that improved inflation data is key for the Fed to consider further rate cuts, leading him to predict that mortgage rates will remain steady in the near term. 

“Even if rates don’t fall much in the near term, the housing backdrop looks more constructive heading into 2026 — mortgage rates are hovering near three-year lows, home price growth has cooled, and income gains are gradually improving affordability — setting the stage for a measured pickup in demand and a slow shift toward a more balanced market over the year ahead,” he added.