U.S. labor market growth slows sharply as healthcare hiring offsets broader 2025 job declines

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U.S. labor growth 2025

Highlights

U.S. nonfarm payrolls rise by only 116,000 in 2025, marking the weakest annual job growth since 2009 aside from 2020.
Private education and health services add 682,000 jobs in 2025, while government and most other sectors record employment declines or stagnation.
Real GDP grows 2.0 percent in 2025 versus 2.6 percent in 2024, and private-sector average hourly earnings increase 3.7 percent year-on-year.

2025 payroll trends and sector shifts

As reported by U.S. Bureau of Labor Statistics, nonfarm payroll employment changes little in 2025, rising by 116,000 over the year under the Current Employment Statistics survey. That equals an average monthly gain of 10,000 jobs, far below the 122,000 average in 2024 and the 150,000 average over the previous 10 years.

Excluding pandemic-related losses in 2020, the 2025 result is the weakest annual employment change since 2009. The private sector adds 296,000 jobs over the year, the smallest nonrecession gain since 2003, while the 12-month private diffusion index stands at 46.0 in December 2025, indicating more industries lose jobs than add them.

Employment growth slows in nearly every major industry sector. Health care, social assistance and other services add jobs, while government, professional and business services, manufacturing, and transportation and warehousing record declines over the year.

Construction is flat after adding jobs in 2024, and professional and business services posts deeper losses than a year earlier. Manufacturing still loses jobs in 2025 but the decline is less severe than in 2024, while retail trade trends down after also losing jobs in the prior year.

Industry impact and broader economic context

Private education and health services posts the strongest job growth of any major sector in 2025, adding 682,000 positions. Without those gains, the U.S. economy would have lost more than half a million jobs over the year.

The report also points to a volatile economic backdrop, with the United States both adding and reducing tariffs on goods and countries during 2025. Real gross domestic product increases by 2.0 percent over the year, below the 2.6 percent pace in 2024, although growth is stronger in the next two quarters as consumer spending remains firm and imports decline before the fourth quarter records only a 0.2 percent increase.

Wage growth remains positive despite the weaker hiring picture. Private-sector average hourly earnings rise by 3.7 percent for all employees and by 3.8 percent for production and nonsupervisory employees, while federal government employment posts its largest job losses in nearly 80 years.

Earlier, we discussed research showing early-career job switching drives over a third of workers’ wage growth.

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