Subdued hiring gives little urgency for policymakers to ease, keeping mortgage relief distant
United States hiring lost momentum in December, but not enough to force the Federal Reserve’s hand on interest rates. For mortgage professionals hoping for quick relief on borrowing costs, the latest jobs report signals a slower, more fragile path to any easing.
Employers added an estimated 50,000 jobs last month and the unemployment rate edged down to 4.4%, according to the Bureau of Labor Statistics. That capped what officials describe as one of the weakest years of job gains in decades, and the softest year of employment growth outside a recession since 2003. Economists have expected a gain of about 55,000 jobs and a 4.5% unemployment rate.
The picture is muddied by earlier revisions. The BLS now estimated the US added 76,000 fewer jobs in October and November, with October marked by the longest government shutdown on record and a loss of 173,000 positions.
Hiring was described as being in a “no hire, no fire” phase, in which job growth continued but remained subdued. Data from Challenger, Gray & Christmas showed that layoffs in December were nearly half the level recorded in November.
Average hourly earnings rose to $37.02, up 3.8% from a year earlier, a pace the Fed watches closely as a key signal for inflation pressures while it weighs future rate cuts. Wage gains, coupled with a jobless rate that remains historically low, undercut the case for an imminent policy pivot.
Market odds reflected that shift. CME FedWatch data puts the probability of a January cut at just 2.8%, suggesting traders see little urgency for the central bank to move.
Fed seen staying on pause
For rate‑setters, the details look more like a justification to wait than to move.
“For the Federal Reserve, this mix supports a cautious pause at the January FOMC meeting, especially with officials split between inflation‑focused hawks and more growth‑ and jobs‑focused doves,” First American senior economist Sam Williamson said.
Minutes from the Fed’s December meeting showed that some participants suggested it would likely be appropriate to keep rates unchanged for some time under their economic outlooks. In a press conference that month, Fed chair Jerome Powell said officials would proceed with caution as they hoped the labor market would stabilize and inflation would cool.
On the other hand, the administration pressed for faster action. Treasury secretary Scott Bessent said in a speech Thursday that lower rates are “the only ingredient missing for even stronger economic growth, which is why the Fed should not delay.”
Federal Reserve governor Stephen Miran, whose term on the Board of Governors ends January 31, has already urged 150 basis points of interest rate cuts in 2026.
Bond yields captured the tension between a weaker hiring backdrop and sticky inflation risks. The 10‑year Treasury yield jumped immediately after the report to 4.211%, its highest level since early September, before easing back toward 4.183% later in the session.
Mortgage impact: Range‑bound, not rescued
For housing, the consensus was that the data nudged cuts further out rather than closer. “This report is fairly neutral with respect to its implications for the housing and mortgage markets,” Mortgage Bankers Association chief economist Mike Fratantoni said.
“It reinforces the sense that the economy is slowly growing but does not increase the urgency for additional rate cuts.”
Williamson echoes that view. “For home buyers, that means mortgage rates are likely to stay close to where they are in the near term,” he said. “Even if rates don’t fall much in the near term, the housing backdrop looks more constructive heading into 2026… setting the stage for a measured pickup in demand and a slow shift toward a more balanced market over the year ahead.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
