U.S. Jobs Market Shows No Relief as 2025 Ends, Hiring Trends Signal Stagnation Ahead

The U.S. labor market ended 2025 with no meaningful improvement, as job growth stalled and unemployment rose to 4.8%, the highest in two years. Economists warn that persistent hiring weakness could delay Federal Reserve rate cuts.

The U.S. jobs market closed 2025 on a subdued note, defying expectations of a rebound despite early optimism. Nonfarm payroll employment grew by just 108,000 in December, well below the 160,000 average projected by economists. The number marks the third consecutive month of subpar job creation, highlighting ongoing hesitancy among employers to expand payrolls. Unemployment climbed to 4.8% in December, up from 4.3% at the start of the year, reflecting both a rise in jobless claims and a slowdown in labor force participation. The data suggests an uneven recovery, with sectors like technology and professional services continuing to cut staff, while healthcare and education saw modest gains. Notably, the number of people quitting their jobs fell to 2.7 million—its lowest level since 2021—indicating diminished worker confidence and mobility. These figures contribute to broader concerns about economic momentum. With inflation holding steady above the Federal Reserve’s 2% target and core PCE inflation at 2.9% for the fourth quarter, policymakers may remain cautious in cutting interest rates. A rate cut is now forecast for mid-2026, compared to earlier projections for late 2025. The stagnation affects multiple stakeholders: consumers face tighter credit conditions due to high borrowing costs, small businesses struggle with labor shortages, and investors brace for prolonged volatility in equities tied to consumer spending and corporate earnings.