December jobs report shows signs of employment slowdown to end 2025

The U.S. labor market concluded 2025 with what appears to be modest job growth. And yet the jobs report released Friday does little to assuage growing questions about whether the economy is stabilizing, stuck in a prolonged “no hire, no fire” stalemate — or whether it’s weakening altogether.

According to the Bureau of Labor Statistics, employers added 50,000 jobs in December, lower than economists expected. The unemployment rate fell slightly even as broader measures of underemployment continued to worsen compared to 2024. And November’s employment figures were revised down to show weaker job growth than expected.

President Donald Trump was eager to tout the data ahead of its scheduled release. On Thursday evening, he posted employment figures on social media showing growth in the private sector incorporating unpublished data from December. The president is typically briefed on the latest employment data a day before the BLS releases it.

At first glance, the numbers suggest that the economy continues to create jobs, albeit at a slow pace. But as you dig deeper, the worrying signs begin to pile up.

Retail job losses raise red flags

One of the most striking developments in the report was a sharp decline of 25,000 retail jobs, an unusual contraction even considering how the BLS figures smooth out seasonal effects. The loss of retail jobs suggests a quiet but deeper decline — either because planned hiring never fully materialized or because companies are actively cutting costs regardless of consumer spending.

The weakness in the retail sector confirms that companies may be acting cautiously and defensively, prioritizing margin protection and operational efficiency over growth. It also raises concerns about demand forecasts through 2026, especially as households continue to feel the pressure of high prices and high borrowing costs.

“Employment declined at warehouse clubs, supercenters and other general merchandise retailers (-19,000) as well as food and beverage retailers (-9,000),” the report details.

Underemployment and long-term unemployment are getting worse

Beyond payroll numbers, other measures of labor market health have continued to erode. The number of workers employed part-time for economic reasons increased again in December, worsening underemployment. At the same time, the number of long-term unemployed – those without work for 27 weeks or more – has continued to grow, now making up a larger share of the unemployed population.

This combination can be read as a warning sign on its own. This suggests that while companies are not announcing aggressive layoffs, consistent with the most telling recessionary behavior of recent decades, they are also not increasing their workforces or offering full-time positions. Millions of people want to find work, but are finding it increasingly difficult to obtain stable, well-paid employment.

The same telling industry story persists

Another worrying sign is how uneven hiring remains across sectors. Like recent private data releases, the BLS report shows that gains are concentrated in health care and “social assistance” – sectors driven by inelastic demand and a large aging population. At the same time, employment in professional and business services remained weak, also reflecting private data that shows a continued decline in white-collar and capital-intensive fields.

Wage growth has been modest, suggesting weaker bargaining power among workers, while weekly working hours have fallen slightly.

A labor market in search of a floor

Friday’s report comes after months of noisy and distorted jobs data, following last fall’s government shutdown and repeated warnings from Federal Reserve Chairman Jerome Powell that official payroll figures may overestimate job creation. In response, investors and policymakers have necessarily turned to private indicators, most of which point to a slowdown in hiring under calm headlines.

As things stand, it looks like 2026 could be the year the U.S. job market goes through the motions of looking for a higher tier.

—Joseph Zeballos-Roig contributed to this report.