The Changing Face of the U.S. Labor Market

The U.S. labour market is at a pivotal moment. Shifts in trade policy, evolving immigration rules, and the growing influence of artificial intelligence are shaping employment trends just as the Federal Reserve begins its first round of rate cuts this year.

Recent disruptions, including a government shutdown that delayed key employment data and leadership changes at the Bureau of Labor Statistics, have added uncertainty. Despite these challenges, a clearer picture of the labour market is beginning to emerge.

From Strong Growth to Steady Adjustment 

After several years of robust job creation, hiring momentum has slowed noticeably in 2025. The three-month average of non-farm payroll gains has fallen to approximately 29,000, down from 168,000 last year. This reflects a market that is cooling but not collapsing.

Companies are taking a measured approach. Many are pausing expansion plans, yet large-scale layoffs remain limited. The result is a low-hire, low-fire environment, typical of an economy adjusting rather than contracting.

A Gradual Loosening, Not a Breakdown 

Broader indicators suggest that labour conditions are gradually easing. The ratio of voluntary resignations to layoffs has fallen below pre-pandemic levels, showing employees are more cautious about changing jobs. Broader unemployment measures, which include part-time workers and those marginally attached to the labour force, are rising faster than the headline rate. Smaller businesses are feeling the greatest strain. Limited pricing power and narrower supply chains have slowed employment growth in this segment of the economy.

Profitability Provides a Cushion 

Corporate fundamentals remain resilient. Profit margins are near the highest levels of the current cycle and mentions of job cuts in company reports have declined. While tariffs may affect profits in the short term, most companies remain well-positioned to maintain stability.

Looking Ahead 

The labour market is softening but continues to operate above recessionary thresholds. The slowdown reflects a normalisation after years of exceptional growth, rather than the start of a contraction. As trade pressures ease and policy conditions remain supportive, employment trends are expected to stabilise and gradually improve through 2026.

At Intrasia Wealth, we continue to monitor these developments closely to help clients position portfolios with balance, resilience, and long-term opportunity.

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