U.S. adds 50,000 jobs in December; 2025 posts weakest hiring since pandemic

The figures underscore a stubborn gap between an economy still expanding at a healthy pace and a job market that has largely stalled, as businesses cited tariff uncertainty, elevated inflation, and the growing reach of artificial intelligence as reasons to hold back on new hires.

Washington — U.S. employers added just 50,000 jobs in December, the Labor Department reported Friday, capping a year in which the economy created only 584,000 positions — the fewest since the COVID-19 pandemic decimated the labor market in 2020 and the smallest annual gain outside a recession since 2003. The unemployment rate edged down to 4.4%, its first decline since June.

The figures underscored a stubborn gap between an economy still growing at a healthy pace and a job market that has largely stalled, as businesses cited tariff uncertainty, elevated inflation, and the growing reach of artificial intelligence as reasons to hold back on new hires.

December’s gain was barely changed from a downwardly revised 56,000 in November. October’s figure was revised steeply downward to a loss of 173,000 positions, from a previously reported decline of 105,000. The government had not released an October jobs report because of a six-week federal shutdown; November’s figures were also distorted by that closure. Friday’s December report was the first uninterrupted reading on the labor market in three months.

“The labor market looks to have stabilized, but at a slower pace of employment growth,” said Blerina Uruci, chief economist at T. Rowe Price. “There is no urgency for the Fed to cut rates further, for now.”

Nearly all of December’s job gains came from health care and the hospitality industry. Health care added 38,500 positions, while restaurants and hotels gained 47,000. State and local governments added 13,000.

Retail shed 25,000 positions, a sign of weaker-than-usual holiday hiring. Manufacturers have shed jobs every month since April, when President Donald Trump announced sweeping tariffs intended to boost domestic production. Construction also posted losses.

The broader U-6 measure of underemployment, which includes discouraged workers and those working part-time involuntarily, stood at 8.4% in December, Labor Department data show, a fuller picture of slack beneath the headline unemployment figure.

A year of subdued gains

The economy added more than 2 million jobs in 2024. The 584,000 added last year represent a sharp reversal, driven largely by a slowdown after Trump’s April “liberation day” tariff announcement. Job gains were weak across most of the year.

Despite the soft labor market, economic growth has continued. Output expanded at a 4.3% annual rate in the third quarter of 2025, the strongest pace in two years, driven by consumer spending. The Federal Reserve Bank of Atlanta forecast growth of roughly 2.7% for the fourth quarter.

Economists noted that an aging workforce and reduced immigration have lowered how many jobs the economy needs to create to hold unemployment steady, making a 50,000-job month less alarming than it once would have been. Low layoff rates also indicate employers are not cutting staff at a pace associated with recession.

Still, for workers seeking new jobs or re-entering the labor market, the environment has grown far less welcoming.

Workers feel the freeze

Ernesto Castro, 44, a Los Angeles resident with nearly a decade of experience providing customer support for software companies, said he has applied for hundreds of positions since leaving his last job in May. He has had only three initial interviews and one follow-up.

“It’s been awful,” he said.

Castro said he believes companies are replacing workers in his field with artificial intelligence tools, and that employees have grown reluctant to switch jobs amid uncertainty — shrinking the pool of open positions for those who need them.

Tariffs stall small-business expansion

Steve Heckeroth, chief executive of Renewables Inc., a Santa Rosa, California, startup developing a small electric tractor for farm use, said shifting tariffs on components from India and China had forced him to postpone hiring needed to fill several hundred advance orders.

Axles and transmissions sourced from India were hit with a 50% tariff. Electronic components from China faced a shifting array of duties.

“It’s delayed us at least six months, the tariffs, just not knowing what our input prices are going to be,” Heckeroth said.

Federal Reserve at a crossroads

The Federal Reserve cut its benchmark interest rate three times in 2025, responding in part to concerns about weakening employment. Some officials now favor holding rates steady to contain inflation that has remained above the central bank’s 2% annual target since 2024. Others have pushed for further cuts to stimulate hiring and spending.

Trump posts jobs data before public release

Before Friday’s report was released, Trump posted to Truth Social on Thursday evening claiming that since January, all new jobs had come from the private sector while government employment had declined. The White House receives embargoed jobs data on the afternoon before the public Friday release; the president’s post appeared to draw on December’s then-unpublished figures as well as revisions to prior months. Employment data are closely guarded before their scheduled release because of their potential to move financial markets.

Most economists said they expect hiring to accelerate in 2026, citing solid growth and the anticipated effect of Trump’s tax legislation. But they acknowledged competing risks: continued weak hiring could drag down consumer spending and growth, while automation and the spread of artificial intelligence could keep reducing demand for workers even as the broader economy expands.