US Job Growth in 2025 Hits Lowest Non-Recession Pace in Decades

Sluggish 2025 US job market belies recent strength, keeping Fed rates steady.

  • U.S. job growth in 2025 was its weakest for a non-recession year since 2003, with just 181,000 jobs added.
  • January’s stronger-than-expected payroll data suggests the Federal Reserve will keep interest rates steady for the near future.
  • Analysts caution that recent job gains are narrowly concentrated, with most sectors showing meager growth or losses.

New data released in March 2025 revealed the United States experienced its lowest single-year employment growth outside a recession in over two decades. The nation added only 181,000 jobs for the year, averaging a paltry 15,000 per month after substantial downward revisions. Consequently, the unemployment rate still managed to edge lower to 4.3% in January, slightly beating forecasts.

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Markets reacted positively, with the S&P 500 rising 15 points and Treasury yields climbing. However, economists quickly tempered the optimistic headline figures. Nancy Vanden Houten, lead economist at Oxford Economics, cautioned that the data “overstates any emerging strength in the labor market.”

She noted that job gains were narrowly based and concentrated primarily in construction and health care. Meanwhile, most other sectors posted meager gains or losses, and government employment continued to decline at both the federal and state levels.

Furthermore, January’s unexpectedly strong report has significant implications for monetary policy. It likely cements that the Federal Reserve will hold interest rates steady for a while. Krishna Guha of Evercore ISI stated the report “pours cold water on the idea the Fed could cut rates again before mid-year.”

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