WASHINGTON — As 2025 gets underway, the job market in the U.S. appears to be continuing its trend from the previous year, showcasing moderate growth in employment opportunities.
When the Labor Department publishes the employment figures for January on Friday, projections suggest that around 170,000 new jobs were added across various sectors, including private companies, government entities, and non-profit organizations. This figure, while respectable, indicates a decrease compared to 2024, which saw an average of 186,000 new jobs each month, particularly highlighted by a spike of 256,000 jobs in December. Analysts also expect the unemployment rate to remain steady at around 4.1%.
The upcoming report will be significant, marking the first monthly job statistics released under Donald Trump’s second term in office. It is anticipated to reflect a resilient economy characterized by job security for consumers, rising wages, and increasing overall consumer confidence which encourages spending.
“The economy is starting 2025 on a strong note,” noted Bill Adams, the chief economist at Comerica Bank.
However, the outlook for the future remains uncertain.
The federal hiring freeze initiated by Trump shortly after his inauguration on January 20 is seen as detrimental to employment growth. Analyst Bradley Saunders from Capital Economics highlighted that the hiring freeze took effect after the Labor Department gathered the January data, meaning any repercussions from this move will not be evident until future reports. Additionally, a recent cold spell that likely led to increased seasonal layoffs in areas like the Midwest and Northeast occurred after the data collection period, indicating further impacts may show up in the February report.
Concerns are also growing regarding Trump’s intention to initiate a trade conflict, particularly with other nations. Already, tariffs of 10% on imports from China have been implemented. Canada and Mexico, the United States’ largest trading partners, are also under scrutiny, although Trump has temporarily delayed a proposed 25% tariff for 30 days to allow for negotiations concerning immigration and drug trafficking issues stemming from those countries. There is also a potential for additional tariffs on the European Union, as Trump points to a significant trade deficit of $236 billion recorded last year, alleging that U.S. exporters face unfair practices.
These tariffs could potentially reignite inflation, which, although it has decreased from the record highs of mid-2022, still remains above the Federal Reserve’s target of 2%. If prices rise as a result of these import taxes, the Fed might reconsider its plans for interest rate cuts in 2025, which would adversely affect economic growth and job creation.
Overall, the labor market has notably cooled compared to the extraordinary growth observed between 2021 and 2023. During the last year, U.S. payrolls expanded by 2.2 million, a drop from 3 million in 2023, 4.5 million in 2022, and a remarkable 7.2 million in 2021, when the economy rebounded sharply post-COVID-19 lockdowns. Additionally, the Labor Department has observed a decline in job postings, with monthly openings decreasing from a peak of 12.2 million in March 2022 to 7.6 million in December, marking a still favorable situation by historical comparisons.
As the labor market cools down, American workers seem to be experiencing a decline in confidence regarding their ability to secure better pay through job changes. The number of individuals quitting their jobs has reduced significantly from a record-high of 4.5 million in April 2022 to 3.2 million in December, falling below pre-pandemic figures.
Nonetheless, layoffs have remained below the levels seen before the pandemic, creating a unique scenario: while job security appears solid for those currently employed, finding new opportunities has become more challenging for job seekers.
On Friday, the Labor Department is also expected to announce annual revisions to previously reported job creation figures, which will likely reveal a less robust growth rate from April 2023 to March 2024 than initially estimated. An earlier announcement in August had indicated a decrease of 818,000 jobs in that timeframe, which adjusted the average monthly hiring number from 242,000 down to 174,000. Once these revisions are officially ratified, they will be integrated into the historical employment data.
