WASHINGTON: The US labour market lost jobs in December for the first time in eight months, providing the strongest evidence yet of how the surge in coronavirus cases is weighing on the economy.
Nonfarm payrolls decreased by 140,000 from the previous month and the unemployment rate was unchanged at 6.7%, the Labor Department said on Friday.
The weakness largely reflected job cuts at restaurants hit hard by restrictions, and that could extend into Joe Biden’s first months in office, with the President-elect already inheriting an economy that’s down almost 10 million jobs compared with before the pandemic.
The data could also further raise prospects for another round of stimulus — on the heels of the $900-billion package approved last month — following Democrats’ victories in Georgia runoff elections that gave the party control of the Senate.
“The report is remarkably weak with regard to leisure and hospitality,” Jeffrey Rosenberg, a senior portfolio manager at BlackRock, said on Bloomberg Television. “That’s really what’s taking the headline number down. That is very clearly about the Covid resurgence we are seeing and underscoring the need for more fiscal policy.”
The pace of hiring will be hard-pressed to accelerate until a meaningful portion of the general population is vaccinated, with distribution in the US running slower than planned and potentially holding back the recovery.
A new virus strain that led to new or extended lockdowns in the UK and Germany has been identified in the US, which risks spurring more restrictions that hinder hiring in the coming months.
In December, there were about 1.5 million new cases per week in the US and Covid-related deaths hit a record pace, prompting some states to tighten business restrictions that led to a pickup in layoffs. Those getting vaccinated are essential workers or the elderly — people that either have already been working through the pandemic or are retired — which doesn’t lead to job gains in the immediate term.
While leisure and hospitality jobs were hard hit, many sectors added jobs in December, suggesting the economic pain was relatively contained. Construction employment rose by 51,000 and manufacturing added 38,000, while retail advanced 120,500 and professional and business services increased by 161,000.
For the full year, payrolls declined by 9.37 million, the most in records back to 1939 and exceeding the combined slump in 2008 and 2009 during the Great Recession and its aftermath.
Private-sector payrolls — which exclude government jobs — decreased by 95,000 in December following a 417,000 gain in November.