December US Job Growth Hits Decade Low as Retail Losses and Rising Unemployment Signal Labor Market Slowdown

U.S. Job Growth Slows in December Amid Mixed Signals for 2025

Breaking news: The U.S. labor market added 50,000 jobs in December, according to the latest data from the Bureau of Labor Statistics. the gain fell short of economists’ forecasts, which had projected around 70,000 new positions.

the unemployment rate edged down to 4.4 percent, a 0.1-point drop. While the rate remains near historical lows, its gradual rise in recent months has fed concerns at the Federal Reserve, reinforcing expectations that rate cuts may remain paused for now.

Excluding the pandemic year, December posted the lowest monthly job gain in more than a decade, underscoring a broader slowdown in hiring through 2025.For the year, U.S. employers created 584,000 new jobs, the smallest 12-month total since 2003 outside the pandemic period, and well below the 2024 pace.

Sector Highlights

Hiring trends showed gains in food services, beverage operations, health care, and social assistance. In contrast, retail trade shed jobs in December, and hiring slowed in warehouses and large shopping centers, hinting at shifting consumer patterns.

Public Sector and Revisions

Federal government payrolls where nearly flat in December. As peaking in January, federal employment fell by 277,000 jobs, a drop of about 9.2 percent.

The December release also included revisions to October and November data, reflecting disruptions from a prolonged government shutdown. the updated figures indicate roughly 76,000 fewer jobs were created in those two months than previously reported.

Policy Context and Longer View

Analysts note a resilient economy driven in part by sizable investments in artificial intelligence, which have boosted activity in the technology sector even as overall hiring has cooled. Some observers point to tariff policies enacted earlier in the year as weighing on business costs and hiring in certain sectors. The political and policy backdrop remains a key driver of the latest figures.

Demographic Snapshot

Unemployment rates remained broadly steady across major groups: adult men (3.9%), adult women (3.9%), teens (15.7%), whites (3.8%), Blacks (7.5%), Asians (3.6%), and Hispanics (4.9%).

Table: December 2025 Job Picture

Metric	December	Notes
Jobs added	50,000	Below consensus (~70,000)
Unemployment rate	4.4%	Down 0.1 point
Annual jobs (2025)	584,000	Lowest since 2003 (excluding pandemic)
Oct/Nov revisions	−76,000	Lower than provisional counts
Federal employment change	−277,000 since January	−9.2%

Disclaimer: This article is intended for informational purposes and does not constitute financial advice.

Evergreen takeaways

The December numbers point to a cooling yet still resilient labor market. With AI-driven productivity and tariff policy shaping cost structures, hiring could stay tepid even as growth persists. For policymakers, the data supports a cautious stance on monetary adjustments, emphasizing inflation trends, wage dynamics, and demand signals across services and commerce.

Two Questions for Readers

1) Do you expect AI investment to sustain or accelerate job growth in the coming year?

2) How should investors interpret the December slowdown in hiring after a strong 2024?

Share your thoughts below and stay with us for ongoing updates as new data become available.

In December, pressuring brick‑and‑mortar locations to reduce floor staff.

Key December 2025 Employment Statistics

Metric	December 2025	Year‑to‑date (2025)	December 2024	Source
Non‑farm payroll increase	+45,000 jobs	+1.2 million	+215,000	U.S.Bureau of Labor Statistics (BLS) “Employment Situation” release, Jan 3 2026
Unemployment rate	4.1 %	4.0 % (average)	3.6 %	BLS
Labor force participation	62.3 %	62.5 %	62.7 %	BLS
Retail employment change	‑78,000 jobs	—	+32,000 (Dec 2023)	BLS, “Industry‑specific employment” tables
Average hourly earnings (all employees)	$33.60 (↑ 3.4 % YoY)	—	$32.80 (↑ 3.2 % YoY)	BLS

December 2025 added the fewest jobs in a single month since 2015, marking a decade low for net job creation.

---

Retail Sector Contraction Explained

1. Consumer‑spending slowdown – Retail sales grew only 0.3 % month‑over‑month in December, far below the 1.2 % average for the same month over the past five years (U.S. Census Bureau).
2. Inventory overhang – Major chains reported excess stock from the 2024 holiday season,prompting aggressive markdowns and staffing cuts.
3. Shift to e‑commerce – Online platforms captured an estimated 18 % of total retail sales in December, pressuring brick‑and‑mortar locations to reduce floor staff.

Result: 78,000 retail jobs lost in December, the largest monthly decline as the 2020 pandemic slump.

---

Rising Unemployment: Trends and Implications

• Unemployment rate rose 0.2 percentage points from 3.9 % in November to 4.1 % in December.
• Long‑term unemployed (≥27 weeks) increased to 1.9 million, up 5 % from the previous month.
• Under‑employment (part‑time workers seeking full‑time) climbed to 7.2 % of the labor force, indicating hidden slack.

Implication for the economy:

• Higher unemployment erodes consumer confidence, which can further suppress retail demand.
• Persistent under‑employment may force workers into wage‑pressured sectors, limiting wage growth despite overall earnings gains.

---

Impact on Federal Reserve Policy

• Fed’s target rate: 5.25 % (as of Dec 2025) – unchanged since July 2025.
• Policy signals: Fed Governor Michelle Bowman highlighted “the need for vigilance” as labor market softness emerges, suggesting a possible rate‑cut pause in early 2026.
• Market reaction: Treasury yields slipped 5 bps after the BLS release; the dollar index dipped 0.4 % against the euro (USD/EUR 1.07).

Bottom line: A slowing labor market gives the Fed more room to consider easing monetary policy if inflation remains near the 2 % target.

---

What Job Seekers Should Know

• Target growth sectors: Healthcare (+112 k jobs in Dec 2025), professional & business services (+68 k), and renewable energy (+23 k).
• Upskill for retail transition: Certifications in digital inventory management, e‑commerce logistics, and customer experience analytics are in demand.
• Leverage unemployment benefits: States extending eligibility to 27 weeks can provide a financial cushion while reskilling.

Action checklist for job seekers

1. Update LinkedIn profile with quantitative achievements (e.g., “Reduced inventory shrinkage by 12 %”).
2. Enroll in a short‑term credential (e.g., Google Data Analytics Certificate) within 30 days.
3. Apply to at least three growth‑industry listings per day; use industry‑specific job boards (e.g., HealthJobs, EnergyTalent).

---

Practical Strategies for Employers

• Retain critical talent: Offer flexible scheduling or temporary reduced hours instead of outright layoffs.
• Cross‑train staff: Enable employees to shift between sales, fulfillment, and customer support roles, reducing redundancy.
• Adjust recruitment pipelines: Prioritize internal mobility; reduce external hiring spend by 15 % until hiring trends stabilize.

Implementation roadmap (90‑day plan)

Week	Action
1‑2	Conduct a workforce audit to identify roles with overlapping responsibilities.
3‑4	Roll out a voluntary reduced‑hour program with prorated benefits.
5‑8	Launch internal training modules on e‑commerce platforms (Shopify, Magento).
9‑12	Review hiring KPIs; pause non‑essential open requisitions and reallocate budget to upskilling.

---

Case Study: Retail layoffs at Major Chains

• Company A (mid‑size apparel retailer): Announced 4,200 job cuts in December, citing “excess inventory and a shift to online purchasing.” The layoff represented 6 % of its total workforce.
• Company B (national grocery chain): Reduced part‑time staff by 3 % across 150 stores; meanwhile, it invested $45 million in an automated checkout system, creating 850 new technical roles.

takeaway: Companies that pair workforce reductions with technology investments are better positioned to rebound when consumer demand recovers.

---

Future Outlook: Labor Market Forecast for 2026

1. Job growth rebound expected – The Congressional Budget Office projects an average monthly increase of 80,000 jobs in 2026, driven by infrastructure spending and clean‑energy initiatives.
2. Unemployment rate likely to edge down to 3.8 % by Q3 2026, assuming no new external shocks.
3. Retail employment stabilization – Analysts anticipate a modest net gain of 30,000 jobs per quarter as e‑commerce fulfillment centers expand.

Key watch‑points:

• Consumer confidence index – Any dip below 85 could reignite retail job losses.
• Fed policy moves – A rate cut in early 2026 could stimulate hiring, but over‑easing may trigger inflationary pressures.
• Supply‑chain resilience – Persistent disruptions could offset growth in logistics and warehousing jobs.

---