U.S. payrolls slowed sharply in December 2025, and markets treated it as a “soft-landing” sign. The U.S. added 50,000 jobs and the unemployment rate held at 4.4%, the Bureau of Labor Statistics said on January 9, 2026.
Stocks rallied anyway. The S&P 500 touched an intraday record the same day, as investors read the report as easing pressure on the Federal Reserve.
What the jobs report showed
The BLS described the month as broadly steady. It said both U.S. payrolls and the jobless rate “changed little” in December.
The details showed a labor market that still adds jobs, but with uneven momentum.
Food services and drinking places added 27,000 jobs. Health care added 21,000 jobs, including a rise in hospitals. Social assistance rose by 17,000 jobs. Retail trade lost 25,000 jobs.
Pay growth stayed firm. Average hourly earnings rose 0.3% in December and were up 3.8% over the year. The average workweek slipped by 0.1 hour to 34.2 hours.
Those figures matter for inflation. Wages can keep services prices sticky, even when U.S. payrolls slow.
Why markets still cheered
The market reaction came fast. Reuters reported that the S&P 500 set an intraday record after the softer U.S. payrolls print “did little to alter” expectations for rate cuts in 2026.
Traders still priced about 54 basis points of easing across 2026, according to LSEG data cited by Reuters. That pricing implied at least two quarter-point cuts remain plausible this year.
The logic is simple. Softer U.S. payrolls reduce the risk of overheating. That supports valuations, especially for rate-sensitive growth shares.
The Fed signal is “pause now, debate later”
Even with weaker U.S. payrolls, the unemployment rate dipped from November’s revised 4.5% to 4.4%. Reuters said that gave the Fed “breathing room” to hold rates steady in the near term.
Rate futures moved toward a longer pause. Reuters reported traders saw a 44% chance of a cut by April, with June viewed as the more likely restart point.
Economists also flagged mixed signals. Fitch’s Olu Sonola said hiring is “stuck in stall speed,” but he also warned the lower jobless rate can ease the Fed’s urgency.
That split frames the 2026 debate. U.S. payrolls look weak, yet wage growth remains solid.
What to watch next
Markets may stay calm if inflation prints cooperate. But risk can reprice quickly if wage pressure persists.
Three near-term catalysts stand out:
Inflation data: Wage growth plus sticky services can force fewer cuts.
Policy headlines: Reuters noted investors also watched U.S. tariff legal risk, which can hit prices and growth.
Revisions: The BLS report included revisions and noted upcoming benchmark and seasonal updates, which can reshape the U.S. payrolls trend.
For now, the market message is consistent. U.S. payrolls slowed, but the economy did not break. That combination keeps the easing story alive, even if the Fed pauses first.