Unemployment Ticks Down to 4.4%, Job Openings Lower Than Expected
The job market continues to cool.
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Updated · 8 min read
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Updated on Jan. 9.
Labor market continues cooling in December
Unemployment was 4.4% in December, compared to 4.5% in November, according to the December jobs report released by the Bureau of Labor Statistics on Jan. 9. Job openings came in below expectations at 50,000.
Here’s what Elizabeth Renter, senior economist at NerdWallet, had to say about the latest jobs report.
Not much changed in the last month of the year — the labor market remains cooler than a few years ago, but not in imminent danger. That said, over the course of the past year, discomfort has no doubt grown for workers. Wage growth has moderated and firms aren’t hiring much.
When a cooler labor market is primarily driven by slowed hiring as opposed to increased layoffs, it can impact new entrants to the labor force more severely. We’re seeing this in the rising unemployment among the young, and in the relative stability of employment among those of “prime age,” (25-54). In other words, if you were employed when this stretch of labor market cooling began, you were better positioned than those who were just finishing their education — even if it feels like you’re stuck now.
We’ve still got a few weeks before the next Fed meeting, but the potential for a rate cut is already making headlines. As it stands, the data points to no need for a cut when the Committee meets this month. And if the current trajectory of the economy remains in play, no dramatic cuts on the horizon. Dramatic cuts to the target interest rate are typically only warranted when the labor market is taking a nose dive. And as of right now, that doesn’t seem to be in the cards.
Job openings declined slightly in November
There were 7.1 million job openings in November, down from 7.4 million in October, according to the latest Job Openings and Labor Turnover Summary (JOLTS), released on Jan. 7. The number of openings is roughly 885,000 lower than last year at the same time.
Here’s what Elizabeth Renter, senior economist at NerdWallet, had to say about the latest JOLTS report.
The latest in job turnover data tells us the labor market is holding steady, but it’s steadily a chilly spot for workers. The rate of workers leaving their jobs remains low, in part because hiring remains subdued. It’s much more difficult to set out for a new position when employers aren’t hiring for the roles you’d be interested in. If there’s good news for workers it’s that the rate of layoffs hasn’t risen.
Employers are likely reluctant to hire amidst the economic uncertainty of frequently changing trade policies, an unknown path for interest rates and another potential federal funding standoff, among other things. A rise in layoffs would signal more than just uncertainty, though. It would indicate employers aren’t just in limbo, but struggling.
ADP data came out this morning too, indicating a healthy number of job gains in private industry. Over the last four months of data, this figure has bounced around from roughly 30,000 in losses to more than 40,000 in gains, twice. This underscores the need to not take a single month of data in isolation (as evidence of a broader trend), and may also offer reassurance to job holders and seekers that there are opportunities to be had.
What are the weekly jobless claims?
Initial jobless claims rose for the week ending Jan. 3, according to the report released on Jan. 8.
Why it matters: The weekly jobless claims, or initial claims, are the number of unemployment insurance claims filed in the past week. They provide an indicator of the strength — or weakness — of the labor market.
Learn more about this week's jobless claims
Jobless claims were 208,000 for the week ending Jan. 3, an increase of 8,000 from the previous week’s revised level of 200,000.
The new four-week moving average — a measurement of the number of people who filed for unemployment insurance for the first time over the last four weeks — was 211,750, down by 7,250 from the previous week's revised average of 219,000.
What's the insured unemployment rate?
Not all types of unemployment are included as part of the insured unemployment rate. It only includes "covered unemployment," as in people who receive unemployment benefits. Those who quit their jobs, for example, aren't included in the insured unemployment rate because they aren't eligible for unemployment benefits.
The advance seasonally adjusted insured unemployment rate — the rate of continuous covered unemployment claims divided by covered employment — was 1.2% for the week ending Dec. 27, unchanged from the previous week’s unrevised rate.
The unemployment rate ticked down slightly in December at 4.4%, compared to 4.5% in November and 4.4% in September, according to the December jobs report released on Jan. 9 by the Bureau of Labor Statistics (BLS). Due to the government shutdown, there is no October jobs report.
Here are some takeaways from the latest report:
- Job gains came in at 50,000 in December. The consensus forecast was an increase of 55,000, according to Morningstar, an investing firm.
- Job gains were revised down by 8,000 in November from 64,000 to 56,000. Gains were also revised down by 68,000 from -105,000 to -173,000 in October.
- Employment went up in food services and drinking places (+27,000), health care (+21,000) and social assistance (+17,000).
- Employment in retail fell by 25,000 jobs.
- Throughout 2025, some 277,000 positions were cut in the federal government for a total 9.2% decline. However, the figures changed little in December (+2,000).
- In December, average hourly earnings for all employees on private nonfarm payrolls increased 3.8% over the past 12 months, compared to a 3.5% 12-month increase reported in November.
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What the latest job market data means for you
The December jobs report shows that the labor market is continuing to cool.
Wage growth (3.7%) remains above inflation growth (2.6%), which means consumers are more likely to remain resilient in the face of price increases — that is, unless there are price shocks. The effect of tariffs on prices haven’t fully set in so it’s unclear how that might impact inflation growth.
There are some vulnerabilities in the job market continuing to trend, including more workers remaining in long-term unemployment, which shows workers may be having more difficulty re-entering the job market. The labor force participation rate also remains sluggish.
Both the health care and social assistance sectors showed strong labor demand, while the number of federal government jobs continued to wane.
Overall, the latest data reflects growing caution among employers as the projected economic picture remains hazy.
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What is the current unemployment rate?
The current unemployment rate is 4.4% for December, a 0.1 percentage point decrease from November (4.5%). The rate is higher than unemployment rates during 2023 and 2024.
The unemployment rate has risen since hitting a 50-year low of 3.4% in April 2023. Since May 2024, the unemployment rate has mostly stayed between 4% and 4.2%.
How the unemployment rate is calculated
The unemployment rate is calculated by dividing the number of unemployed people by the number of people in the labor force. (The labor force is considered the sum of those who are currently working or looking for work.) The result is then multiplied by 100 to get a percentage:
Number of unemployed people / Labor force x 100 = X%, which is the unemployment rate
Will unemployment go up soon?
The labor market showed signs of weakening throughout 2025.
The recent rise in unemployment was a byproduct of monetary policymakers’ effort to curb inflation by hiking interest rates. The Federal Reserve raised the federal funds rate 11 times between March 2022 and July 2023. Now that inflation is consistently slowing, the Fed has taken steps to prevent unemployment from rising further.
The Fed cut rates in 2024 at its September, November and December meetings. It paused rates at every meeting so far in 2025, but has indicated that there could be some rate cuts in 2025.
» MORE: What is the minimum wage?
Are wages increasing?
Wage growth is moderating from what it was a year ago but is still higher than it was pre-pandemic, according to data from the Federal Reserve Bank of Atlanta. The three-month moving average of median hourly wage growth — when measured over the previous 12 months — has slowed from its peak in the summer of 2022.
For September, the three-month wage growth percent change was 4.1%, which is in line with the three-month moving average rate since November 2024.
» MORE: What is the minimum wage?
What does the Employment Cost Index show?
Increases in compensation costs in the second quarter of 2025 were the same as the first quarter, according to the most recent quarterly BLS Employment Cost Index, which measures wage and salary growth. Wages and salaries, as well as benefits comprise total compensation costs.
The July 31 report shows compensation costs increased by 0.9% in the second quarter of 2025, matching the increase in the first quarter.
Year-over-year measurements show that compensation cost increases held steady in Q2 2025 (3.6%), matching the pace of the first quarter, but still slower than the rates seen throughout 2024.
- Q1 2025: 3.6%
- Q4 2024: 3.8%
- Q3 2024: 3.9%
- Q2 2024: 4.0%
- Q1 2024: 4.2%
For the 12-month period ending in June 2025, wages and salaries increased 3.6%, a decrease from 4.2% in the 12-month period ending in June 2024.
Benefit costs had a lower increase in the 12-month period ending in June (3.5%) compared to June 2024 (3.8%).
More key jobs data and what it means
How many jobs were gained in December?
The economy added 50,000 in December, according to the BLS, below expected gains. Here’s how many jobs were added in previous months.
- 56,000 in November.
- -173,000 in October.
- 119,000 in September.
- -4,000 in August 2025.
- 72,000 in July 2025.
- -13,000 in June 2025.
- 19,000 in May 2025.
- 158,000 in April 2025.
- 120,000 in March 2025
- 102,000 in February 2025.
- 111,000 in January 2025.
- 323,000 in December 2024.
What is the labor force participation rate?
The labor force participation rate changed little at 62.4% in December, compared to 62.5% in November, according to the Bureau of Labor Statistics.
Why it matters: The labor force participation rate is the percentage of the population that is working or looking for work.
The rate is calculated as the labor force divided by the total population that’s eligible to work. (The Bureau of Labor Statistics defines the total population that’s eligible to work as the “civilian noninstitutional population,” which refers to people ages 16 and older who are not in military service or incarcerated.) The result is multiplied by 100 to get a percentage:
Labor force / Civilian noninstitutional population x 100 = X%, which is the labor force participation rate
Since October 2002, the labor force participation rate was lowest in April 2020 (60.1%) and highest in June 2003 (66.5%), according to BLS data.
How many job openings were there in November?
The latest Job Openings and Labor Turnover Summary (JOLTS), released on Jan. 7, shows job openings were 7.1 million in November compared to:
- 7.4 million in October.
- 7.7 million in September
- 7.2 million in August
- 7.2 million in July
- 7.4 million in June
- 7.7 million in May
- 7.4 million in April
- 7.2 million in March
- 7.5 million in February
- 7.8 million January
- 7.5 million in December
- 8 million in November
- 7.6 million in October
The seasonally adjusted job openings rate in November was little changed from October at 4.3%. By comparison, the job openings rate in November 2024 was 4.8%.
The number of job openings went down in accommodation and food services (-148,000); transportation, warehousing and utilities (-108,000); and wholesale trade (-63,000). Meanwhile, job openings rose in construction (+90,000).
What is the layoff rate?
The rate of layoffs in November (1.1%) was little changed from October (1.2%), according to the most recent JOLTS report. Layoffs and discharges fell in accommodation and food services (-107,000); health care and social assistance (-52,000); and state and local government, excluding education (-26,000).
What is the quit rate?
The JOLTS report also shows the quit rate in November was 2%, compared to 1.9% in October. Quits rose in accommodation and food services (+208,000).
Why it matters: Economists say quit rates are a key factor in the health of employment prospects since quitting shows that workers feel safe making a job switch within their sector or outside it entirely.
The current quit rate is consistent with pre-pandemic levels after peaking at 3% in both Nov. 2021 and April 2022.
When is the next jobs report?
The next jobs report will show data for January and it will be released on Feb. 6.
(Photo by Spencer Platt/Getty Images News via Getty Images)
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