Kiplinger Jobs Outlook: Hiring Still Weak and Narrow, but Stabilizing
Modest job gains with a dip in unemployment could mean hiring is stabilizing at a low level.
Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
50,000 jobs were added in December, following a similar gain in November, and the unemployment rate dipped to 4.4%. That is enough, at the moment, to quiet the fears of an unfolding labor market downturn, which will likely keep the Federal Reserve from cutting interest rates at their January 29 policy meeting.
The job gains continue to be narrow, however. Almost all of them were concentrated in health care, social assistance, leisure and hospitality, and local government. Many industries are still registering job declines: construction, manufacturing, retail, wholesale, warehousing and temporary help. General merchandise retail saw the biggest drop (19,400). Also, job gains in October and November were pared back, with private payrolls registering only 1,000 new positions in October. (Federal jobs fell by 179,000 in October, since many buyout offers specified a September 30 end date.)
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
It is likely that the recent job gains will be revised downward in the next jobs data release on February 6, when the annual benchmark revision takes place. This adjusts the level of employment to match that of the larger Quarterly Census of Employment and Wages. The first monthly releases of the payroll employment numbers often miss turning points in the economy, because the government statisticians initially assume that the missing data will continue past trends. The Bureau of Labor Statistics has announced that they will be revising the methodology for how they account for missing data, in an attempt to improve the tracking of turning points.
One bright spot in the December report was that the unemployment rate dipped to 4.4%, down from 4.6% in November. Initial unemployment claims remain low, meaning mass layoffs are still rare. The number of workers reporting that they want full-time work but had to settle for part-time jobs declined in December. But it’s likely that the unemployment rate will edge up through the first half of 2026, peaking at 4.7% before retreating to 4.5% by year-end 2026. Annual wage growth ended the year at a still-elevated 3.8%, but should continue to weaken gradually, ending a bit above 3.0% by the end of 2026. Pay increases tend to lag other labor market indicators.
If the job market weakens further, however, expect the Federal Reserve to come through with more interest rate cuts in an effort to boost the economy. We expect at least two more quarter-point cuts, and perhaps three, in 2026.
Related Content
-
Dow Adds 292 Points as Goldman, Nvidia Soar: Stock Market TodayTaiwan Semiconductor's strong earnings sparked a rally in tech stocks on Thursday, while Goldman Sachs' earnings boosted financials.
-
Why Public Markets Don't Look Like They Used To -
Turning 65 in 2026? Here Is Exactly How to Sign Up for MedicareWhether you’re months away from your 65th birthday or plan to work past retirement age, here are the steps to secure your Medicare coverage and avoid costly mistakes.
-
Dow Adds 292 Points as Goldman, Nvidia Soar: Stock Market Today
Taiwan Semiconductor's strong earnings sparked a rally in tech stocks on Thursday, while Goldman Sachs' earnings boosted financials.
-
What's in Store for the Stock Market in 2026?Wall Street expects the bull market to keep running in the year ahead.
-
Is a Caregiving Strategy — for Yourself and Others — Missing From Your Retirement Plan?Millions of people over 65 care for grandkids, adult kids or aging parents and will also need care themselves. Building a caregiving strategy is crucial.
-
6 Financially Savvy Power Moves for Women in 2026 (Prepare to Be in Charge!)Don't let the day-to-day get in the way of long-term financial planning. Here's how to get organized — including a reminder to dream big about your future.
-
Private Equity Is Fundamentally Changing: What Now for Investors and Business Owners?For 40 years, private equity enjoyed extraordinary returns thanks to falling rates and abundant credit. That's changed. What should PE firms and clients do now?
-
Stocks See First Back-to-Back Losses of 2026: Stock Market TodayRising geopolitical worries and a continued sell off in financial stocks kept pressure on the main indexes on Wednesday.
-
Countries That Will Pay You to Move: Cash Grants, Incentives and What to KnowExplore real relocation incentives — from cash grants and tax breaks to startup funding — that make moving abroad or to smaller towns more affordable and rewarding.
-
Mortgage Protection Insurance: What It Covers and When It Makes SenseHow mortgage protection insurance works, what it costs, and when it’s actually useful in a financial plan.
