The Stagnant Reality: Annual Revisions Hide Deep US Labor Market Contraction

The US labor market appears stagnant.

Job creation in April was 115,000, following 185,000 in March and a 156,000 loss in February. However, these figures should be viewed cautiously due to annual restatements that typically eliminate 0.8-1.2 million jobs, equivalent to about 100,000 in average monthly additions historically. This pattern often creates an illusion of stability with monthly gains of 100-150,000, only to be revised away.

Analyzing the trend over the last 12 months reveals a significant slowdown. The turning point was May of last year; since then, the average monthly job increase across the entire economy has been only 21,000, even including the recent stronger months. Before March, the average was a monthly contraction of 5,000. For comparison, the 12 months prior to May 2023 saw an average growth of 80,000 per month, and the period from January 2023 to April 2024 averaged 200,000 per month.

Job growth has decelerated consistently since 2022, falling below medium- and long-term trends by mid-2024. In late 2025, the US experienced its first decline in employment over a 6-month moving average since 2008 (excluding 2020), though this negative trend has not solidified as it did in 2008.

The Bureau of Labor Statistics (BLS) seems to be attempting to project success in recent months. Over the past 12 months, only five sectors showed job growth: Health Care and Social Assistance (averaging 55k vs. 38k pre-2020), Accommodation and Food Services (9k vs. 22k), Other Services (4k vs. 6k), Construction (4k vs. 20k), and Arts, Entertainment, and Recreation (3k vs. 5k). These five sectors account for 34.7% of all US jobs (55.1 million).

The most significant job contractions were seen in: Government (-22k vs. +12k), Information and Communications (-8k vs. +2k), Finance and Insurance (-7k vs. +13k), Transportation, Warehousing, and Utilities (-6k vs. +18k), Manufacturing (-6k vs. +12k), Education (-3k vs. +4k), Professional and Business Services (-2k vs. +30k), Mining (-1k vs. +1k), and Retail Trade (near zero vs. -7k). Essentially, nearly all job creation is driven solely by healthcare. Excluding healthcare, the economy is contracting by 34,000 jobs per month, a pace consistent with at least a recessionary environment, as two-thirds of sectors are in decline.