Job creation came to a halt in December as restrictions from rising Covid-19 cases hammered virus-prone industries, particularly bars and restaurants, which lost nearly half a million positions this month.
The labor department reported on Friday that nonfarm payrolls have fallen by 140,000. That was below the expectations of 50,000 economists surveyed by Dow Jones.
The unemployment rate was 6.7%, compared to the estimate of 6.8%. An alternative unemployment measure that includes discouraged and part-time workers for economic reasons fell from 12% to 11.7%.
However, markets pulled the report back, likely in the expectation that it reinforced arguments for more stimulus from Congress and reflected a likely temporary cut in jobs that would be reversed as the distribution of the Covid vaccine accelerated.
Since a recovery that began in May, the economy had recovered 12.3 million lost jobs. The biggest hit came in the hospitality industry, where hotels, restaurants and bars suffered from restrictions that restricted travel, eating and drinking.
The industry saw a decline of 498,000 positions during the month, most of which were in restaurants and bars, declining 372,000. Overall, hospitality has fallen 3.9 million jobs since January, down 23.2%, the Bureau of Labor Statistics report found.
In the summer, many of the restrictions on establishment limits were lifted, but they were reintroduced in recent months as coronavirus cases increased and states and communities once again stopped or restricted indoor eating and drinking.
As an extraordinary year drew to a close, in which about 22 million workers were on leave in March and April, the labor market recovered sharply, nevertheless still leaving about half of the displaced on the sidelines.
Private education also fell by 63,000, while government jobs shrank again with the loss of 45,000. The other services category decreased by 22,000.
Professional and business services grew by 161,000, while retail added 121,000 during the Christmas shopping season and construction 51,000.
Transportation and storage also added 47,000 and healthcare grew 39,000.
That blow comes to the job market, even though economic growth looks otherwise solid in the fourth quarter. The Atlanta Fed’s GDPNow tracker sees the U.S. economy accelerate by 8.5% over the last three months of the year, although economists expect the first quarter to show little or no growth in 2021.
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