Unpredictable Job Market: What to Expect in 2025's Final Jobs Report
The year 2025 is drawing to a close, and the Bureau of Labor Statistics is set to release the final jobs report for the year on Friday. Economists are divided on what this report will reveal, with estimates ranging from 55,000 to over 105,000 jobs added in December. Despite the uncertainty, one thing is clear: the labor market is facing significant challenges.
The consensus estimate of 55,000 jobs added in December aligns with the year-to-date job growth but falls short of November's preliminary gain of 64,000 jobs. However, some economists argue that seasonal factors, such as holiday hiring, could boost the December total to over 105,000. Regardless of the exact figure, the unemployment rate is expected to decline to 4.5%, down from a four-year high of 4.6% in November.
But beneath the surface, the labor market is struggling. Gregory Daco, chief economist at EY-Parthenon, warns that the true momentum for job growth is likely much weaker than it appears. He emphasizes that the labor market's underlying strength has been soft for some time, and this is unlikely to change with the December report.
Heather Long, chief economist at Navy Federal Credit Union, paints a grim picture. She predicts that total job gains for 2025 will be a meager 710,000, the worst hiring outside of a recession since 2003. Even 2010, a year on the heels of the Great Recession, saw better hiring than 2025.
The past 12 months have been marked by high uncertainty, with sweeping policies, immigration shifts, and companies experimenting with AI, all contributing to muted employment gains or even losses across most industries. The healthcare sector, driven by an aging population, and leisure and hospitality, benefiting from a bifurcated economy, have been the lone bright spots.
Nela Richardson, chief economist at ADP, explains that healthcare services are expensive for most consumers, while leisure and hospitality spending is discretionary for all. These sectors, comprising 22% of employment, accounted for 84% of job gains from January to November 2025. The remaining 78% of industries have faced a different reality.
The labor market became even more lopsided after April 2025, when President Donald Trump's tariff announcement caused sentiment to plummet and uncertainty to soar. From April to November, healthcare and leisure and hospitality outpaced the net jobs added across the entire labor market. Navy Federal Credit Union's Long describes a 'hiring recession' affecting almost every other industry.
Data released earlier this week further confirmed the listless state of the broader labor market. The BLS' Job Openings and Labor Turnover Survey revealed that US businesses sought fewer workers in November, with hiring activity at its lowest rate in over a decade (excluding pandemic distortions). Layoff activity and the rate of people quitting their jobs remained low in November.
The labor market's low-fire trend likely continued into December, according to new data. Some economists suggest that the labor market slowdown may be bottoming out. US businesses' job cut announcements fell to a 17-month low in December, with employers announcing 35,553 layoffs, while hiring plans were the highest since 2022. This positive sign suggests that the year closed with fewer announced layoff plans, despite December's typically slow pace.
Bank of America's data showed no acceleration in unemployment payments in December, and year-over-year payroll growth was 0.6%, up from 0.2% the previous month. David Michael Tinsley, senior economist at Bank of America Institute, expressed optimism, suggesting that the worst of the slowdown might be behind us.
The December jobs report will provide a clearer picture of the US labor market after the government shutdown muddied the employment data for October and November. Oren Klachkin, Nationwide's financial market economist, acknowledges that the shutdown impacts may not be fully past, but the December report should offer valuable insights into the economy's state.
