According to the December jobs report, we ended 2022 with a whimper, not a bang in the vibrant labor market. Nonfarm payroll growth was a dismal 50,000 new jobs added. This figure was below the consensus forecast, which expected a stronger gain. Revisions indicate a net loss of 76,000 jobs in the previous two months. This adds to the evidence of a softening trend in employment.
GDP in December still showed the economy growing modestly, suggesting no recession is imminent. At the same time, the unemployment rate got better, declining from 4.5% in November to 4.4%. November’s preliminary unemployment rate was revised down — a measure of how difficult these headwinds have been for the labor market. Compare that to 2025, when the entire economy gained 584,000 new jobs. Job growth ended the year on a weak note.
Job Growth and Sector Performance
The healthcare and social assistance industry proved a powerful engine of growth in 2025, producing 713,000 new jobs. This sector’s expansion is a direct result of continued, ever-growing demand for healthcare services fueled by an aging population and renewed emphasis on public health. December’s report dealt a blow to perceptions of the labor market’s strength overall. It instead took a sharp turn, recording a three-month average of net job losses, down by 22,000 jobs.
The diffusion index, a measure of how widespread job growth is across different sectors, slid back down to 50.8 in December. This overall decline can be interpreted to mean that a smaller share of industries are helping to drive positive employment growth. The private sector experienced disappointing job growth last month. In fact, over the past three months, it only added 29,000 new jobs when you leave out government employment.
Government Employment Trends
The government sector experienced an idiosyncratic decline in October thanks to the federal government’s deferred resignation program. This unusual situation added to a complex environment for net new job growth in the public sector. Consequently, job growth in the private sector, which makes up almost 90% of all employment, was incredibly weak in December.
The last jobs report of 2025 published just days ago showed this continued fight in government and industry alike. The report provided relatively quiet data, indicating that while some sectors may experience fluctuations, the overall trend suggests a cautious outlook for future employment growth.
Economic Context and Implications
The labor force data is a sign of improvement. This recovery comes on the heels of a normalization period after January’s government shutdown. With the reopening of businesses and warm summer weather, there was optimism about hotels, restaurants, and other travel- and tourism-related sectors bouncing back. The data so far shows that keeping this momentum up is still an uphill battle.
As policymakers steer through possible economic headwinds, analysts recommend keeping a watchful eye on the employment front. The lack of strong job creation could signal underlying issues that may impact consumer spending and overall economic health moving forward.