The U.S. labor market concluded 2025 with lower-than-anticipated job creation in December, as nonfarm payrolls increased by 50,000, while the unemployment rate decreased to 4.4%. This performance followed a year characterized by significantly reduced overall employment gains compared to the previous year. Data from late 2024 also indicated a moderation in job openings and hiring activity. Various indicators and economists' analyses suggest a potential shift in labor market dynamics, with concerns regarding future stability despite recent signs of stabilization in layoff activity.
December 2025 Labor Market Overview
In December 2025, nonfarm payrolls in the United States increased by a seasonally adjusted 50,000, according to the Bureau of Labor Statistics (BLS). This figure was below the downwardly revised 56,000 jobs added in November 2025 and also fell short of the Dow Jones estimate of 73,000. Concurrently, the unemployment rate decreased to 4.4% from 4.5% in November, exceeding the forecast of 4.5%. A broader measure of unemployment, which includes discouraged workers and those working part-time for economic reasons, declined to 8.4%, a 0.3 percentage point drop from November. The household survey indicated an increase of 232,000 in employment for the month, while the labor force participation rate experienced a slight decrease to 62.4%.
Annual 2025 Performance and Data Revisions
The year 2025 ended with employers adding 584,000 jobs, marking it as the year with the slowest employment growth since 2020 and the weakest year outside of a recession since 2003. This represented a decrease compared to the 2 million new jobs in 2024. Throughout 2025, payroll gains averaged 49,000 per month, a decline from an average of 168,000 per month in 2024.
Revisions to prior months' data led to lower totals: November's payroll number was revised down by 8,000, and October's job loss was adjusted to 173,000 from an earlier estimate of 105,000. These revisions contributed to a total of 76,000 jobs being subtracted from the October and November figures. The Bureau of Labor Statistics faced challenges in 2025, including data collection and report delays due to a 43-day government shutdown. President Donald Trump replaced former Commissioner Erika McEntarfer with William J. Wiatrowski in August 2025 following a July payroll report and subsequent revisions.
Job Openings and Hiring Activity
Late 2024 Trends:
In November 2024, the number of estimated job openings in the United States fell to 7.15 million, down from 7.45 million in October, marking the lowest level in over a year. Hiring activity also saw a reduction, with an estimated 5.12 million new hires in November 2024, a decrease from 5.37 million in October, representing the lowest hiring level since June 2024. The hiring rate, calculated as hires as a percentage of total employment, returned to 3.2%, matching its lowest rate in over a decade, excluding the pandemic period.
December 2024 Private Sector Data:
ADP reported that private-sector employers added an estimated 41,000 jobs in December 2024, following a net loss of 29,000 jobs in November. Small establishments experienced job gains in December 2024 after losses in November, while large employers reduced hiring.
Broader Indicators:
The BLS's Job Openings and Labor Turnover Survey (JOLTS) for November 2024 indicated that U.S. businesses sought fewer workers, and hiring activity decreased. The reduced pace of hiring has been cited as a factor contributing to reluctance among current employees to leave their positions, which in turn results in fewer job openings for new entrants to the workforce.
Layoffs and Job Security
Announced layoffs in December 2025 reached 35,553, a 17-month low according to the consulting firm Challenger, Gray & Christmas. This figure represents a 50% decrease from November 2025 and an 8% decrease compared to December 2024, marking the lowest monthly total since July 2024. Despite this December decrease, employers announced over 1.2 million job cuts for the full year 2025, an increase of 58% from the previous year and the highest annual total since 2020. The fourth quarter of 2025 recorded the highest number of job cuts since 2008.
Conversely, companies also announced plans to hire 10,496 workers in December 2025, a nearly 16% rise from November and a 31% increase year-over-year. Government statistics on initial jobless claims have remained stable, with recent data indicating claims at 208,000 and the four-week moving average reaching its lowest point since April 27, 2024.
Despite historically low unemployment, a Federal Reserve Bank of New York survey indicated that workers are expressing increased concern regarding job security and are less confident about securing new employment if laid off.
Sectoral Performance
Job Gains:
In December 2025, restaurant and bar jobs led growth, adding 27,000 positions. Health care saw an increase of 21,000, and social assistance grew by 17,000. Government employment rose by 2,000. For the full year 2025, health care and leisure and hospitality were among the few sectors to experience job additions and collectively accounted for 84% of total job gains from January through November. Health care growth has been linked to an aging population, while leisure and hospitality has been influenced by consumer spending patterns.
In November 2024, minimal net job gains were recorded in the Information (+12,000), Federal government (+11,000), and Construction (+11,000) sectors. In December 2024, ADP reported primary job gains in health care and education (+39,000 combined) and leisure and hospitality (+24,000).
Job Losses:
In December 2025, retail experienced a decline of 25,000 jobs. The manufacturing sector reduced its workforce by 8,000 jobs, marking its tenth consecutive month of downturn, as indicated by the Institute for Supply Management's index. This sector has been impacted by tariffs, with many domestic manufacturers relying on foreign components. The federal government's overall employment was down by 277,000 jobs from the start of 2025, following significant job losses earlier in the fall from worker buyouts.
In December 2024, ADP reported the largest net job losses in professional and business services (-29,000) and the information sector (-12,000).
Wages and Pay Trends
Pay gains for individuals remaining in their jobs held steady at 4.4% in November 2024, according to ADP data. Wage increases for those changing jobs accelerated to 6.6% from 6.3% during the same period. For December 2025, average hourly earnings increased by 0.3% for the month, aligning with forecasts, though the annual increase of 3.8% was 0.2 percentage points higher than anticipated. The average workweek shortened to 34.2 hours in December 2025.
Economic Context and Federal Reserve Actions
Federal Reserve officials monitor employment data for insights into future interest rate decisions. The Federal Reserve reduced its benchmark interest rate in December 2025 for the third time since September. Markets anticipate the Fed will maintain current interest rates for a period, with the next reduction not priced in until June.
The Atlanta Fed's current measure of economic data suggested a 5.4% annualized GDP increase in the fourth quarter of 2025, following a 4.3% rise in the third quarter. Consumer spending during the holiday season was strong, with online spending rising 6.8% from the previous year to a record $257.8 billion, according to Adobe estimates. This economic growth has been described as part of a "K-shaped economy," where higher-income consumers contribute significantly to spending.
Economist Perspectives and Outlook
Economists have observed various indicators suggesting a potential shift in the U.S. labor market. The Beveridge curve, which examines the relationship between the unemployment rate and the job vacancy rate, suggests the labor market could be nearing a deterioration. A falling job vacancy rate (4.6%) indicates increasing difficulty in finding work, potentially leading to a rise in unemployment if a tipping point is reached. The jobs-workers gap, an indicator tied to the Beveridge curve, has reportedly turned negative, signifying more workers than available jobs.
Some economists have noted that while hiring and layoff rates have been low, an increase in layoffs combined with scarce job availability could pose economic challenges. The unemployment rate recently exceeded its three-month moving average, an event that has historically occurred before or during recessions. The Conference Board's "labor differential" measure, comparing views on job plentifulness versus difficulty in finding jobs, is trending higher, typically correlating with the unemployment rate.
However, recent data also suggests a potential stabilization in the labor market slowdown. December 2025 saw job cut announcements reach a 17-month low, with hiring announcements simultaneously at their highest since 2022. Bank of America data for December 2025 showed no acceleration in unemployment payments among its customer accounts. Year-over-year payroll growth was 0.6% in December 2025, an increase from 0.2% in November. One economist indicated that while the labor market currently exhibits low hiring and firing activity, the data suggests the slowdown may be approaching its conclusion. The stability observed is partly attributed to a simultaneous cooling of labor supply and demand.