U.S. job growth slows sharply: Just 50,000 jobs added as 2025 marks weakest hiring year since 2003
U.S. job growth slows sharply as hiring cools in December. Image Credit: Hispanolistic—E+/Getty Images; LaylaBird—E+/Getty Images; alvarez—E+/Getty Images; Photo composite Encyclopædia Britannica, Inc.
The U.S. labor market ended 2025 on a notably weak footing, with employers adding just 50,000 jobs in December, far below expectations and cementing last year as the slowest period of job growth outside a recession since 2003, according to new data released Friday by the Bureau of Labor Statistics (BLS).
While hiring cooled sharply, the unemployment rate unexpectedly fell to 4.4%, down from a revised 4.5% in November, offering a mixed picture of an economy struggling with uncertainty but still showing pockets of resilience.
December Jobs Report Misses Expectations
Nonfarm payrolls rose by a seasonally adjusted 50,000 jobs in December, falling short of economists’ expectations of around 73,000 and marking a slowdown from November’s downwardly revised gain of 56,000.
The December figure capped a year defined by employer caution, with businesses slowing recruitment amid high interest rates, stubborn inflation, and major uncertainty surrounding trade and immigration policy.
Economists say the slowdown reflects a broader pause in corporate hiring rather than a wave of layoffs, a sign of an economy that is cooling, not collapsing.
2025: Weakest Hiring Year in Over Two Decades
The latest data confirms that 2025 recorded just 584,000 net job gains, making it the weakest year for employment growth outside of recessionary periods since 2003.
On average, payrolls grew by only 49,000 jobs per month, a sharp drop from the 168,000 monthly average in 2024.
Heather Long, chief economist at Navy Federal Credit Union, described the trend bluntly:
“It’s fair to say that 2025 was a hiring recession in the United States. Growth is strong, but hiring is not.”
This disconnect, often described as a “jobless boom”, has benefited financial markets while leaving many workers anxious about their prospects.
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Unemployment Rate Falls, but Participation Slips
Despite the weak job gains, the unemployment rate edged down to 4.4%, partly due to shifts captured in the household survey, which showed employment rising by 232,000.
However, the labor force participation rate slipped to 62.4%, suggesting that some Americans may be stepping away from active job searches.
A broader measure of labor underutilization, including discouraged workers and those working part-time for economic reasons, fell to 8.4%, down 0.3 percentage points from November.
Which Sectors Added, or Lost, Jobs
Hiring gains in December were narrowly concentrated:
- Restaurants and bars: +27,000 jobs
- Health care: +21,000 jobs
- Social assistance: +17,000 jobs
Meanwhile, retail lost 25,000 jobs, reflecting post-holiday cutbacks, while government employment rose by just 2,000.
The uneven distribution underscores how few industries are actively expanding, reinforcing concerns about the breadth of the slowdown.
Wages Continue to Rise, Adding Inflation Pressure
Average hourly earnings increased 0.3% in December, in line with expectations. On an annual basis, wages rose 3.8%, slightly hotter than forecast.
While rising wages support household spending, they also complicate the Federal Reserve’s battle against inflation, particularly at a time when hiring is already slowing.
Americans Growing More Anxious About Jobs
Consumer sentiment around employment has deteriorated sharply. A recent New York Federal Reserve survey showed the perceived probability of finding a job falling to a record low of 43.1%.
At the same time, Americans’ perceived risk of losing their jobs rose to its highest level since April 2025, highlighting growing unease even as headline unemployment remains relatively low.
Markets and Fed Policy in Focus
Financial markets initially reacted calmly to the data. Stock futures edged higher, while Treasury yields remained stable, as investors weighed the report’s mixed signals.
The Federal Reserve, which cut interest rates three times late last year, is closely monitoring labor conditions. Traders are currently pricing in just a 14% chance of a rate cut at the Fed’s next meeting, with expectations leaning toward a prolonged pause.
Economists say the weak hiring data gives the Fed room to ease policy later in the year, but not urgently.
What the Jobs Report Signals Going Forward
The December jobs report confirms that the U.S. labor market is losing momentum, even as overall economic growth remains strong.
With job openings falling to their lowest level in more than a year and hiring rates near decade lows, economists warn that 2026 could bring further cooling unless interest rates fall or business confidence improves.
For now, the data paints a clear picture: the labor market is no longer driving the economy forward, and that shift could reshape policy decisions in the months ahead.
FAQ
How many jobs were added in December 2025?
The U.S. added 50,000 jobs, significantly below expectations and marking a sharp slowdown in hiring.
Why is the 2025 jobs report significant?
2025 recorded the weakest job growth outside a recession since 2003, with just 584,000 jobs added for the entire year.
Why did the unemployment rate fall despite weak hiring?
The unemployment rate fell to 4.4% due to changes in household employment data and a slight decline in labor force participation.
Which industries added the most jobs in December?
Restaurants, health care, and social assistance led job gains, while retail saw notable losses.
Are wages still rising?
Yes. Average hourly earnings rose 3.8% year over year, exceeding expectations and adding inflationary pressure.
How does this affect Federal Reserve interest rate policy?
The weak hiring data supports the case for future rate cuts, but persistent wage growth may delay action.
Are Americans worried about finding jobs?
Yes. Surveys show Americans are more pessimistic about job prospects than at any point in over a decade.
Is the U.S. economy heading into a recession?
Not necessarily. Economists describe the current situation as a “jobless boom”, where economic growth remains solid but hiring is sluggish.
