The United States labour market ended 2025 on a cautious note, with hiring activity remaining subdued in December, according to official data released on Friday. This capped off a year marked by significantly weaker employment gains, even as the overall unemployment rate edged lower.
December Data Shows Persistent Caution
The US Labor Department report, cited by AP, revealed that employers added just 50,000 jobs in December, a figure nearly unchanged from a downwardly revised 56,000 jobs added in November. In a modest positive sign, the unemployment rate slipped to 4.4% from 4.5% the previous month. This marked the first decline in the jobless rate since June.
The figures underscore a growing trend of business caution regarding workforce expansion. This hesitation persists despite an improvement in broader economic growth metrics. Analysts point to several factors for this reluctance:
- Aggressive hiring by many firms in the immediate post-pandemic phase has left them with less need to add staff now.
- Ongoing uncertainty stemming from shifting US tariff policies and elevated inflation is causing others to hold back.
- The growing impact of automation and artificial intelligence on various job roles is also influencing hiring decisions.
A Year of Slowing Job Creation
The December report was particularly significant as it provided the first clear, undisrupted reading of the labour market in three months. Official employment data for October was not released due to a six-week government shutdown, while November's figures were distorted by the same event.
The final numbers for 2025 close out a year where job creation lost considerable momentum. The economy generated an average of 111,000 jobs per month in the first quarter of the year. However, that pace dropped sharply to just 11,000 jobs a month in the three months ended August. A modest rebound to 22,000 jobs in November preceded December's 50,000 figure.
This weak hiring trend has emerged as a key puzzle for economists, as the US economy has continued to grow at a healthy pace. Growth reached an annualised rate of 4.3% in the July-September quarter of last year, even as job gains softened and unemployment trended higher for much of the year.
Fed Response and Divided Outlook
In response to the fading momentum in hiring, the US Federal Reserve cut its key interest rate three times in late 2025. The aim was to support borrowing, consumer spending, and ultimately, employment. However, Fed Chair Jerome Powell has since indicated that policymakers may hold rates steady in the coming months to assess how the economy evolves.
Despite low levels of layoffs and a relatively stable unemployment rate, economists remain divided on the future outlook. Some anticipate hiring will accelerate if strong economic growth continues. Others, however, caution that advancements in automation and artificial intelligence may allow the economy to expand without a corresponding significant rise in traditional employment, presenting a long-term structural shift.
