The US job market ended 2025 on a subdued note, with employers adding only 50,000 positions in December, fewer than expected. This capped off a year of sluggish employment growth, the weakest since the COVID-19 pandemic in 2020.
According to data from the US Labor Department, the unemployment rate dipped slightly to 4.4% in December. However, job gains for the full year averaged just 49,000 per month, a sharp decline from the estimated 168,000 monthly additions in 2024.
The mixed economic signals underscore the challenges facing job seekers in the world’s largest economy. While the US has continued to grow, with GDP expanding at an annual rate of 4.3% in the third quarter, this expansion has not translated into significant hiring.
Sectors such as retail and manufacturing reported losses in December, offset by gains in healthcare, bars, and restaurants. The Labor Department also revised down its estimates for job creation in October and November, indicating the labour market has been weaker than previously thought.
“Today’s report confirms what we think has been evident for some time—the labour market is no longer working in favour of job seekers,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
The sluggish job growth has prompted the US Federal Reserve to cut interest rates three times last year, starting in September, in an effort to boost the economy. The central bank’s key lending rate is now at 3.6%, the lowest level in three years.
However, policymakers remain divided on how much further borrowing costs should fall. Analysts said the latest employment data is unlikely to resolve this debate, as the Fed navigates the mixed signals from the labour market and broader economy.
“Until the data provide a clearer direction, a divided Fed is likely to stay that way,” Zentner added. “Lower rates are likely coming this year, but the markets may have to be patient.”
The monthly jobs report is closely watched by economists and investors as a key indicator of the US economy’s health. The data is also tightly guarded, with concerns about potential misuse of the information for financial gain.