Job creation in the United States slowed sharply at the end of 2025, capping off the weakest year for employment growth since the height of the Covid pandemic.
According to data released by the US Labor Department, employers added just 50,000 jobs in December, a figure that came in below expectations. Despite the modest hiring, the unemployment rate edged down to 4.4%.
Overall job gains across 2025 were the smallest recorded since 2020, when the pandemic triggered widespread layoffs and business closures across the country.
Throughout the year, companies have been navigating an uncertain environment shaped by sweeping policy shifts introduced by President Donald Trump. These include the introduction of tariffs, a tougher stance on immigration, and reductions in government spending.
While the broader US economy has remained resilient amid these changes—expanding at an annualised rate of 4.3% in the three months through September—this growth has not translated into strong employment gains.
Economic expansion has largely been supported by steady consumer spending and rising exports, yet hiring has remained subdued. On average, employers added roughly 49,000 jobs per month in 2025, a steep decline from the estimated average of two million jobs added per month the previous year.
The Labor Department also revised earlier figures, reporting that employment growth in October and November was 76,000 lower than previously estimated.
Losses were reported in sectors including retail and manufacturing during December, though these declines were partially offset by increased hiring in healthcare, as well as in bars and restaurants.
The figures highlight a complex picture for American workers. While hiring activity has slowed considerably over the past year, widespread job cuts have so far failed to materialise.
In response to the cooling labour market, the US Federal Reserve has moved to loosen monetary policy, lowering its benchmark interest rate in an effort to support economic activity.
The central bank reduced interest rates three times beginning in September, even as concerns lingered about persistent inflation. The key lending rate now stands at approximately 3.6%, its lowest level in three years.
However, policymakers remain divided over how much further borrowing costs should be reduced.
Economists say the latest employment data is unlikely to settle that debate. After rising to 4.5% in November, the unemployment rate fell back to 4.4% in December, matching its level from September.
“Today’s figures reinforce what has been apparent for some time—the labour market is no longer tilted in favour of job seekers,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
She added that uncertainty remains over the direction of policy: “Until the data offer clearer signals, divisions within the Federal Reserve are likely to persist. Rate cuts are expected this year, but markets may need to remain patient.”
