What should you look for in today’s employment report

US Labor Market Faces Uncertainty as 2025 Ends

On Friday morning, the Bureau of Labor Statistics will unveil its latest report on the state of employment in the United States. Economists are divided in their predictions for this final jobs update of 2025, with projections ranging widely.

Most experts anticipate that December saw an increase of about 55,000 jobs, highlighting that employment growth over the past year has been the slowest in decades.

However, some analysts believe that seasonal trends, including a surge in holiday hiring, could push December’s job gains above 105,000.

According to FactSet, the unemployment rate is expected to dip to 4.5%, following a recent peak of 4.6% in November.

Regardless of the official figures, many Americans are growing more pessimistic about their job prospects.

Heather Long, chief economist at Navy Federal Credit Union, commented, “Total job growth for 2025 is projected to reach just 710,000. That’s the weakest pace of hiring outside of a recession since 2003. Even 2010, in the aftermath of the Great Recession, saw stronger job creation than this year.”

The Federal Reserve Bank of New York’s latest Survey of Consumer Expectations revealed that in December, only 43.1% of respondents believed they could find a job if needed—the lowest level since the survey began in 2013.

The same survey also indicated that concerns about job loss rose to their highest point since April 2025.

Uneven Job Growth Across Sectors

Over the past year, significant uncertainty—driven by sweeping policy changes like new tariffs, shifts in immigration, and to a lesser extent, companies experimenting with artificial intelligence—has led to sluggish or even negative job growth in most industries.

Health care and leisure and hospitality have been notable exceptions. Health care continues to expand due to an aging population, while leisure and hospitality have benefited from a divided economy.

Nela Richardson, chief economist at ADP, explained, “Health services are costly for most, while leisure and hospitality are optional for everyone. These sectors reflect a K-shaped economy, where higher-income households are fueling spending.”

From January to November 2025, these two industries—representing about 22% of the workforce—were responsible for 84% of all new jobs. The remaining sectors, making up 78% of employment, have struggled.

After President Donald Trump’s major tariff announcement in April 2025, business confidence dropped sharply, and hiring plans stalled. Between April and November, job growth in health care and leisure and hospitality outpaced the net gains across the entire labor market.

Hiring Recession Hits Most Industries

According to Heather Long of Navy Federal Credit Union, nearly every other sector is experiencing a “hiring recession.”

Recent data further underscores the sluggishness of the broader job market. The latest Job Openings and Labor Turnover Survey from the BLS showed that US employers were seeking fewer workers in November, with hiring activity dropping to its lowest level in over ten years, excluding the pandemic period.

Despite this, layoffs and voluntary resignations remained low in November.

Some level of turnover is essential for a healthy labor market and economic growth. However, it is now taking job seekers months to secure new positions, as the US job market has become increasingly exclusive.

Signs of Improvement on the Horizon?

Some economists are optimistic that the worst of the slowdown may soon be over.

Challenger, Gray & Christmas reported that December saw the fewest job cut announcements in 17 months. Employers announced 35,553 layoffs last month, while hiring plans reached their highest December level since 2022.

Andy Challenger, the company’s chief revenue officer, noted, “The year ended with the lowest number of announced layoffs; while December is usually quiet, this, along with increased hiring plans, is encouraging after a year of significant job cuts.”

Separately, the latest data from the Department of Labor showed that about 208,000 people filed initial claims for unemployment benefits during the week ending January 3.

Bank of America also reported no increase in unemployment payments among its customers in December.

David Michael Tinsley, senior economist at Bank of America Institute, told reporters, “While the labor market remains in a period of limited hiring and firing, our data suggests that the worst of the downturn may be behind us.”