United States: Hiring Weakness Persists

Hiring momentum has clearly slowed in the United States. While the final four months of 2024 saw an average of 217,000 jobs created per month, that pace dropped to 122,750 in the first four months of 2025, and has since fallen to just 26,750 per month since May. Excluding the pandemic period, we have to go back to 2010 to find such weak results.

The slowdown is also fairly broad-based. For a fifth consecutive month, fewer than half of the 250 tracked sectors reported an increase in employment. Manufacturing hasn’t posted positive net job gains since March, and the natural resources sector has been in decline since April. This highlights the difficulty of stimulating these industries External link. under the current policy approach favoured by the White House. Services are faring somewhat better, but growth has still slowed compared to last year. Notably, 78,000 jobs have been lost in professional and business services since the start of the year. Growth in private services is now largely driven by healthcare. The decline in government employment is coming from both state and federal levels (local government employment is up). More significant layoffs are expected at the federal level in the coming months, as early-year cuts begin to be reflected following a deferred retirement program.

Interestingly, the household survey paints a more positive picture for August, showing a gain of 288,000 jobs. However, this follows a drop of 260,000 in July, underscoring the volatility of this survey. The rise in the unemployment rate is due more to a larger increase in the labour force than in employment (the participation rate also rose).

Overall, the US labour market is showing multiple signs of weakness that could persist. While tariffs may be causing less damage than initially feared External link., uncertainty continues to cloud the outlook. This opens the door for a rate cut by the Federal Reserve at its September 17 meeting.