U.S. Job Market Posts Weakest Growth Since 2020 as Hiring Slows Sharply

The U.S. economy added only 50,000 jobs in December, closing out the weakest year for employment growth since the COVID-19-driven collapse of 2020.

Excluding 2020, 2025 marked the slowest pace of job creation since the aftermath of the global financial crisis in 2009. Just 584,000 jobs were added over the course of the year — a sharp decline from the more than 2 million positions created annually in 2023 and 2024, and far below the 4 million jobs added in 2022 during the post-pandemic rebound.

After accounting for revisions, the average monthly job gain in 2025 stood at just 48,000.

The labor market's slowdown didn’t come entirely as a surprise. A significant drop in government employment contributed to the trend, especially in October, when tens of thousands of federal jobs were eliminated under Elon Musk’s Department of Government Efficiency and officially ended.

Additionally, President Donald Trump’s strict immigration policies prompted businesses to pull back on hiring noncitizen workers — a shift that may have removed a key support for the labor market, as previous increases in immigration had helped ease labor shortages.

The picture of the job market has been murky for months due to delays in official data releases caused by the prolonged U.S. government shutdown — the longest in history.

While major layoffs have remained limited, job seekers are now facing a tougher environment than a year ago. Slower hiring is also making it harder for workers to voluntarily switch jobs.

The unemployment rate dropped slightly to 4.4% in December, though much of the decline resulted from technical adjustments made by the Bureau of Labor Statistics, making the dip appear more significant than it truly is.

In addition, previous job figures were revised downward. October’s job loss was updated from 105,000 to a steeper 173,000, while November’s job gains were cut from 64,000 to just 56,000.

“This wasn’t exactly a standout December jobs report,” said Eric Merlis, co-head of global markets at Citizens. He noted that broader labor market indicators showed little movement last month, suggesting the market remains steady, though sluggish.

The sectors showing the most hiring in December were food services, health care, and social assistance. In contrast, retail and manufacturing saw job losses.

Average hourly earnings reached $37.02 in December, up 3.8% from the previous year. Wage growth remains a key focus for economists and the Federal Reserve, as it can signal inflationary pressure and influence decisions on interest rate cuts.

Leading up to Friday’s data release, the overall direction of the labor market had been uncertain. Wall Street had expected around 73,000 jobs to be added in December and forecast a slight decrease in the unemployment rate to 4.5%, according to a Dow Jones survey.

On a more positive note, layoffs in December were down 50% compared to November, according to a report from Challenger, Gray & Christmas. Layoffs also fell 8% from the same time a year ago.

Initial unemployment claims for the week ending January 3 also came in lower than expected, signaling some resilience as economists continue to watch for signs of a labor market that is slowing, but not collapsing.