Private payroll shows first drop since April as spread of coronavirus hits job growth, ADP says

Private payrolls in December contracted for the first time since the onset of the coronavirus pandemic, according to a report released by ADP on Wednesday.

The drop to 123,000 gave a sign that the US economy had cooled considerably as the end of 2020 approached. Economists polled by Dow Jones were expecting growth of 60,000.

December’s drop thwarted seven consecutive months of job growth resulting from massive holidays instituted in March and April as large swathes of the U.S. economy shut down to fight the spread of Covid-19.

Companies laid off 19.4 million net workers in April and have recouped 9.9 million since, according to ADP estimates, which sometimes differ significantly from the Labor Department’s monthly non-farm monthly wage tally. December’s drop follows an increase of 304,000 in November, a downward revised figure of 3,000 from the original estimate.

At the industry level, the struggling leisure and hospitality sector led the cuts with 58,000, as states and municipalities rolled back restrictions on indoor dining, while open-air dining. air have become less practical as the colder weather sets in.

Almost all of the layoffs came from companies that employ more than 1,000 workers, as hotel and restaurant chains have downsized.

Firms in this category reduced their workforce by 169,000, while small firms with fewer than 20 workers, also a component of the bar and restaurant industry, reduced their workforce by 16,000. Franchises have lost 5,300 positions and more cuts are likely to occur, with Disney and Marriott announcing steep cuts in December.

Commerce, transport and utilities reduced the workforce by 50,000, while the other services category was reduced by 12,000 and information services by 6,000. Manufacturing also saw a loss of 21. 000 positions and the level of education decreased by 1000.

Companies with 50 to 499 workers created 37,000 jobs.

Growth sectors include professional and business services (+12,000), education and health services (+8,000), and construction (+3,000).

The ADP report, which is compiled with Moody’s Analytics, comes two days ahead of the Labor Department’s December employment report, which is expected to show job growth of just 50,000 after the 245,000 increase in November.

During most of the pandemic, ADP estimates were lower than the government’s final tally. Private payrolls added 344,000 in November, according to the Labor Ministry, 40,000 more than the final ADP tally.