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The Labor Market: Softening? Or Stabilizing?
The Bureau of Labor Statistics’ job numbers for December 2025 showed little month-over-month change to non-farm payroll employment (50,000) and the unemployment rate (4.4%).
According to a recent Marcus & Millichap report, average job growth in 2025 was approximately 49,000 per month, compared with over 167,000 per month in 2024. But combined with the unemployment rate, the overall results point to “a labor market that remains broadly balanced, rather than weakening outright,” the report noted.
Additionally, Challenger, Gray & Christmas’ year-end write-up said that “the year closed with the fewest announced layoff plans all year,” representing “a positive sign after a year of high job-cutting plans,” according to Andy Challenger.
Marcus & Millichap noted that service industries, specifically those less exposed to tariff-related consequences, continued to add jobs. Productivity increased, as did wages, though worker confidence in finding new jobs fell. Additionally, “December jobs data showed a clear bifurcation between goods-producing industries and less trade-exposed service sectors,” Marcus & Millichap analysts explained.
In light of the above (as well as continued economic uncertainty and an inflation rate that remains above the 2% target), the Federal Reserve Open Markets Committee (FOMC) kept the federal funds rate at 3.5% to 3.75%, indicating that continued monitoring would take place.
Marcus & Millichap analysts indicated that wage growth could mean “stickier services inflation.” As such, “combined with the potential inflationary impact of tariffs, these dynamics are likely to keep the Fed cautious about cutting interest rates in the near term,” the report concluded.
- ◦People
- ◦Economy
- ◦Policy/Gov't
