US economy undershoots expectations to add just 50,000 jobs in December
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US economy undershoots expectations to add just 50,000 jobs in December on x (opens in a new window)US economy undershoots expectations to add just 50,000 jobs in December on facebook (opens in a new window)US economy undershoots expectations to add just 50,000 jobs in December on linkedin (opens in a new window)US economy undershoots expectations to add just 50,000 jobs in December on whatsapp (opens in a new window) Save US economy undershoots expectations to add just 50,000 jobs in December on x (opens in a new window)US economy undershoots expectations to add just 50,000 jobs in December on facebook (opens in a new window)US economy undershoots expectations to add just 50,000 jobs in December on linkedin (opens in a new window)US economy undershoots expectations to add just 50,000 jobs in December on whatsapp (opens in a new window) Save Claire Jones, US economics editor and Jill R Shah in New YorkPublishedJanuary 9 2026UpdatedJanuary 9 2026Jump to comments sectionPrint this pageUnlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The US economy added just 50,000 jobs in December, undershooting expectations, in the latest sign that the labour market is cooling after years of strong growth.Friday’s figure from the Bureau of Labor Statistics fell short of the 70,000 predicted by economists polled by Bloomberg. However, the unemployment rate unexpectedly fell to 4.4 per cent from November’s original 4.6 per cent reading. The data provides the most complete picture of the US jobs market for several months, after the releases for November and October were heavily affected by the government shutdown.The November jobs figure was revised down to 56,000 on Friday from an initial reading of 64,000. The unemployment rate for November was revised to 4.5 per cent. Some content could not load. Check your internet connection or browser settings.US short-term Treasury yields ticked up slightly after the release of the report, reflecting the lower than expected jobless rate for December. The two-year yield, which tracks expectations for monetary policy, was up 0.03 percentage points to 3.52 per cent.The data release adds to evidence of deterioration in the labour market, which has been hit by cuts to the federal government workforce and a slowdown in private-sector hiring.The Federal Reserve has cut US borrowing costs at each of its past three meetings, leaving its benchmark target range at a three-year low of 3.5 to 3.75 per cent.Fed chair Jay Powell signalled in December that the bar to further cuts was high, saying borrowing costs were now “well positioned”.Economists said the surprise fall in unemployment would bolster the case for the US central bank to pause its rate-cutting cycle at its next meeting later this month.“Goodbye, January! The Fed will likely hold course for now with the labour market showing tentative signs of stabilising,” said Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management. “We expect the Fed to remain on hold for now, but still pencil in two cuts for the rest of 2026.”Eric Winograd, chief economist at AllianceBernstein, said: “The labour market is stagnant but not collapsing, and I expect that will be sufficient for the Fed to pause in January and await more information rather than continuing to cut rates.”The Fed has also raised concerns about the accuracy of recent BLS figures, with Powell arguing that the US economy is adding 60,000 fewer jobs a month than the jobs report claims.Economists expect the US central bank to continue cutting borrowing costs later in 2026 amid signs that inflationary pressures are subsiding.“While this morning’s data is unlikely to incite any urgency for the Fed to cut again in January, the easing bias is clearly intact,” said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.Mike Reynolds, vice-president of investment strategy at Glenmede, said: “The labour market is doing okay, but it’s just really not robust at all with light hiring and also light firing . . . It’s a tenuous balance.”Still, Reynolds added that the report was “strong enough” to give the Fed “a little bit more patience” on rate cuts.Reuse this content (opens in new window) CommentsJump to comments sectionPromoted Content Follow the topics in this article US economy Add to myFT US employment Add to myFT Claire Jones Add to myFT CommentsThe US economy added just 50,000 jobs in December, undershooting expectations, in the latest sign that the labour market is cooling after years of strong growth.Friday’s figure from the Bureau of Labor Statistics fell short of the 70,000 predicted by economists polled by Bloomberg. However, the unemployment rate unexpectedly fell to 4.4 per cent from November’s original 4.6 per cent reading. The data provides the most complete picture of the US jobs market for several months, after the releases for November and October were heavily affected by the government shutdown.The November jobs figure was revised down to 56,000 on Friday from an initial reading of 64,000. The unemployment rate for November was revised to 4.5 per cent. Some content could not load. Check your internet connection or browser settings.US short-term Treasury yields ticked up slightly after the release of the report, reflecting the lower than expected jobless rate for December. The two-year yield, which tracks expectations for monetary policy, was up 0.03 percentage points to 3.52 per cent.The data release adds to evidence of deterioration in the labour market, which has been hit by cuts to the federal government workforce and a slowdown in private-sector hiring.The Federal Reserve has cut US borrowing costs at each of its past three meetings, leaving its benchmark target range at a three-year low of 3.5 to 3.75 per cent.Fed chair Jay Powell signalled in December that the bar to further cuts was high, saying borrowing costs were now “well positioned”.Economists said the surprise fall in unemployment would bolster the case for the US central bank to pause its rate-cutting cycle at its next meeting later this month.“Goodbye, January! The Fed will likely hold course for now with the labour market showing tentative signs of stabilising,” said Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management. “We expect the Fed to remain on hold for now, but still pencil in two cuts for the rest of 2026.”Eric Winograd, chief economist at AllianceBernstein, said: “The labour market is stagnant but not collapsing, and I expect that will be sufficient for the Fed to pause in January and await more information rather than continuing to cut rates.”The Fed has also raised concerns about the accuracy of recent BLS figures, with Powell arguing that the US economy is adding 60,000 fewer jobs a month than the jobs report claims.Economists expect the US central bank to continue cutting borrowing costs later in 2026 amid signs that inflationary pressures are subsiding.“While this morning’s data is unlikely to incite any urgency for the Fed to cut again in January, the easing bias is clearly intact,” said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.Mike Reynolds, vice-president of investment strategy at Glenmede, said: “The labour market is doing okay, but it’s just really not robust at all with light hiring and also light firing . . . It’s a tenuous balance.”Still, Reynolds added that the report was “strong enough” to give the Fed “a little bit more patience” on rate cuts.