The numbers: The US lost jobs for the first time in eight months in December as the coronavirus put pressure on the economy again and forced companies to resort to more layoffs.
The government and private sectors cut 140,000 jobs last month, the Bureau of Labor Statistics said Friday.
The employment decline was the first since April last year, when the US lost a whopping 20.8 million jobs in that one month alone.
The economy is still lacking some 10 million jobs that existed before the outbreak of the pandemic, with little prospect of recovery soon.
Empty patio tables at a California drive-in restaurant. The corona virus is costing the economy jobs again.
AFP via Getty Images
If there was a glimpse of commodity news in the report, the layoffs were concentrated in restaurants and other businesses that depended on large groups of customers. Many other segments of the economy even posted strong employment gains last month.
The official unemployment rate, meanwhile, remained unchanged at 6.7%. Yet economists estimate that actual unemployment is several points higher because the official unemployment rate does not include the roughly 4 million people who left the labor market last year.
Read: Unemployment claims at the end of 2020 still very high
“People dropping out of the workforce is a big deal,” said Thomas Barkin, president of the Federal Reserve.
US equities rose slightly in the beginning of transactions. The Dow Jones Industrial Average DJIA,
set a new record Thursday as investors look past the current economic troubles to better times later in the year as more people get vaccinated.
What happened: Employment fell by 372,000 in bars and restaurants as shoppers shrank and many states re-imposed business restrictions in an effort to slow a record increase in coronavirus cases across the country.
Many companies had to lay off employees a second or third time and some even had to close for good.
Jobs in recreation – theme parks, casinos, and the like – also decreased by 92,000 and the hotel industry scored 24,000 jobs.
In addition to the job losses, employment decreased by 63,000 in private education and 45,000 in government.
The news wasn’t all bad: employment rose in a number of other key segments of the economy.
For example, hires increased by 161,000 in professional white-collar workers and 121,000 in retail, although the increase in retail employment was likely exaggerated by seasonal changes.
Construction companies also added 51,000 jobs amid a boom in home sales, while manufacturers added 38,000 workers to their payroll. And employment rose by 47,000 among shippers and transport companies delivering more parcels than ever before to homes and businesses.
Recruitments were also stronger in November and October than previously reported. The number of new jobs created in November was increased from 245,000 to 336,000. Job growth in October was revised from 610,000 to 654,000.
Big picture: The American economy was not hit nearly as badly by the coronavirus outbreak in late 2020 as it was during the first attack last spring.
Still, momentum has clearly slowed. Economic growth and hiring are unlikely to accelerate again until vaccinations become more widespread and the pandemic disappears. Unemployment is expected to remain high at least until the summer.
What do they say? “This is a major setback for the labor market and the economy, but the limited concentration of losses due to constraints keeps a positive light on the eventual recovery after vaccination,” said senior economist Sal Guatieri at BMO Capital Markets.
“This is a pause in the recovery, not a complete freeze,” said FHN Financial chief economist Chris Low.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
opened slightly higher in Friday trades.
Investors are counting on a stronger economy in 2021, aided by more federal stimulus from a Democratic president and a democratically controlled Congress.