U.S. employment fell 101,000 jobs in December and the Bureau of Labor Statistics sharply boosted its estimate of November job losses to 88,000 according to figures released Friday.

The number of people unemployed rose 381,000 in the last two months. The monthly manufacturing job loss widened to 65,000 and there was an unusual loss of 104,000 retail jobs, including 63,000 restaurant employees. Much of the decline in retailing is likely seasonal adjustment problems -- it has been a cold, snowy winter so far -- that will be reversed later.
The job total does not include 53,000 reservists recalled to active duty by the end of December or Pentagon civilian employees recently sent overseas.
The December labor market report was very weak even after allowing for the negative impact of military call-ups and bad weather. But it is not weak enough to significantly lower the economic outlook for next year. This is painful but it is the necessary process of clearing out excess costs and implementing productivity improvements to boost margins enough to permit business expansion and payroll growth. The alternative is European-style long-term stagnation.
Trucking and warehousing employment declined 4,000 jobs to 1.825 million. This should be interpreted as steady since the job total has fluctuated in very narrow range for the past year.