US unemployment rate dipped to 4.4 per cent in December
U.S. job growth slowed more than expected in December as businesses were wary of hiring because of import taxes and rising artificial intelligence investments, but the unemployment rate fell to 4.4 percent, supporting expectations that the Federal Reserve will leave interest rates unchanged this month.
Nonfarm payroll employment rose by 50,000 jobs last month, following a downwardly revised 56,000 job gain in November, the Labor Department’s Bureau of Labor Statistics said Friday.
Economists polled by Reuters had previously forecast 60,000 new jobs would be added, following an increase of 64,000 reported in November.
The closely watched jobs report suggested the labor market was stuck in what economists and policymakers call a “no hiring, no firing” mode.
It also confirmed that the economy was in a jobless expansion.
Economic growth and worker productivity increased in the third quarter, due in part to a boom in AI spending.
The labor market lost significant momentum last year, largely attributed to US President Donald Trump’s aggressive trade and immigration policies; Economists and policymakers said this reduced both the demand for and supply of workers.
But the sharp slowdown in job growth begins in 2024.
The BLS estimates that approximately 911,000 fewer jobs were created in the 12 months through March 2025 than previously reported.
The agency will release its payroll benchmark revision next month along with the January employment report.
The overcounting is blamed on the birth-death model, which is used by the BLS to estimate how many jobs are gained or lost as companies open or close in a given month.
Last month, the BLS said it would change its birth-death model by including updated sample information each month starting in January.
Along with the December employment report, the BLS released annual revisions to the past five years of household survey data.
The unemployment rate is calculated from a household survey.
Annual population control regulations normally included in the January employment report will be postponed.
The unemployment rate for November was revised to 4.5 percent from the previously reported 4.6 percent.
The median forecast in a Reuters survey of economists was that the unemployment rate would fall to 4.5 percent in December.
Some economists say low supply is preventing a sharp rise in the unemployment rate.
They estimate that between 50,000 and 120,000 jobs need to be created each month to keep up with growth in the working-age population.
The US central bank cut its benchmark interest rate by a quarter point in December to a range of 3.50-3.75 percent, but officials stated that they may pause further cuts in borrowing costs for now to better understand the direction of the economy.
Economists increasingly view the U.S. labor market’s challenges as structural rather than cyclical, as factors such as tariffs and artificial intelligence prevent companies from hiring more workers, making rate cuts less effective at stimulating job growth.
