Employment Growth Rate Slows; Industry Economists Weigh in on Latest Jobs Data
The pace of employment growth slowed in December to 50,000, in line with the average pace of 49,000 for all of 2025, the U.S. Bureau of Labor Statistics reported Friday.
MBA Senior Vice President and Chief Economist Mike Fratantoni noted that employment growth was much slower than 2024’s roughly 168,000 pace. “Employment numbers for October and November were revised downwards by 76,000, considerably weaker than initially reported,” he said. “The economy is growing, but unevenly, and employers certainly appear to be cautious about adding additional workers, as evidenced by the still very slow hiring rate in the JOLTS data.”
Fratantoni said private sector job gains in December were concentrated in just a few sectors, including hospitality and health care. There was also an increase of 18,000 in local government jobs in December.
“The unemployment rate declined to 4.4% in December, with the November rate revised down to 4.5% due to the annual revisions to the seasonal adjustment factors,” Fratantoni said. “The participation rate dropped a tenth over the month as more individuals left the labor force. The share of workers who had been unemployed for more than six months increased to 26% in December, another sign that it is getting tougher for job seekers to find a new position.”
Fratantoni called the report fairly neutral with respect to its implications for the housing and mortgage markets. “It reinforces the sense that the economy is slowly growing but does not increase the urgency for additional rate cuts. As we look ahead to the spring housing market, these trends are likely to support only modest improvement in the pace of activity,” he said.
Sam Williamson, senior economist with First American, Santa Ana, Calif., noted that for the Federal Reserve, the mix of hiring and wage growth supports a “cautious pause” at the January FOMC meeting. “Especially with officials split between inflation-focused hawks and more growth- and jobs-focused doves. 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.”
For home buyers, that means mortgage rates are likely to stay close to where they are in the near term, Williamson added. “The Fed is still watching inflation closely and isn’t in a hurry to cut again unless inflation cools more or the job market weakens further,” he said. “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.”
