The U.S. labor market is expected to show modest improvement in December, with forecasts indicating a rise in nonfarm payrolls by 73,000.
The report, set to be released by the Bureau of Labor Statistics on Friday at 8:30 a.m. ET, suggests a decrease in the unemployment rate to 4.5%. This is slightly better than the average monthly gain of 55,000 seen in the previous 11 months of 2025.
Throughout 2025, the labor market experienced notable fluctuations, with job gains peaking at 158,000 in April and suffering a loss of 105,000 in October.
As the year comes to a close, many economists see the labor market as stable, if not stellar. Amy Glaser, senior vice president of business operations at Adecco Staffing, remarked, "The year is ending stronger than it started," highlighting a positive shift in hiring and a slowdown of layoffs.
Despite the positive indicators, some Federal Reserve policymakers express concerns about underlying issues in the labor market.
They worry that the current low unemployment rate may not fully reflect the job market's health. These policymakers have recently supported three consecutive interest rate cuts, believing that strengthening the jobs outlook is more important than fears of rising inflation.
Job growth in 2025 has been concentrated in sectors that benefit from expansionary fiscal policy, particularly in health care and government.
Glaser anticipates that this trend will continue into 2026. She noted that companies are increasingly focused on retaining their existing workforce. Employers are offering salary increases, bonuses, and investing in upskilling and reskilling programs to enhance employee value.
This December jobs report will be the first on-time report since the end of the government shutdown in mid-November, raising questions about potential data gaps.
Economists expect that the first truly clean report will not arrive until February 2026. As we head into the new year, the labor market appears to be cautiously optimistic, with signs of stability and ongoing efforts for improvement.