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Numbers: The United States lost jobs in December for the first time in eight months, as the coronavirus once again weighs on the economy and forces companies to resort to more layoffs.
The government and the private sector cut 140,000 jobs last month, the Bureau of Labor Statistics said Friday.
The drop in employment was the first since last April, when the United States lost a gargantuan 20.8 million jobs in a single month.
The economy is still missing some 10 million jobs that existed before the start of the pandemic, with little chance of their being recovered anytime soon.
Empty patio tables at a dinner drive in California. The coronavirus is once again costing the economy jobs.
AFP via Getty Images
While there was a glimmer of product news in the report, the layoffs were concentrated in restaurants and other businesses that depend on large crowds of customers. Many other segments of the economy actually posted strong employment gains over the past month.
The official unemployment rate, meanwhile, remained unchanged at 6.7%. Still, economists estimate that actual unemployment is several percentage points higher because the official unemployment rate does not include around 4 million people who left the labor force last year.
Lily: Job applications still very high at the end of 2020
“People dropping out of the workforce are a big problem,” said Thomas Barkin, Chairman of the Federal Reserve.
In the first few trades, US stocks edged up. The Dow Jones Industrial Average DJIA,
set a new record on Thursday as investors look past the current economic difficulties towards better times later in the year as more people get vaccinated.
What happened: Employment fell by 372,000 at bars and restaurants as customers walked away and many states reimposed trade restrictions in a bid to slow a record increase in coronavirus cases across the country.
Many companies have had to lay off workers for a second or third time and some have even had to close permanently.
Jobs in recreation – theme parks, casinos and others – also fell by 92,000 and the hotel industry cut 24,000 jobs.
Added to job losses, employment fell by 63,000 in private education and 45,000 in government.
The news was not all bad: employment increased in a number of other major segments of the economy.
Hires increased by 161,000 in white-collar workers, for example, and 121,000 in retail stores, although the increase in retail employment was likely exaggerated by seasonal fluctuations.
Construction companies also created 51,000 jobs as home sales grew, while manufacturers added 38,000 workers to their payroll. And employment rose by 47,000 among shippers and transport companies, which deliver more packages than ever to homes and businesses.
Hiring was also stronger in November and October than previously announced. The number of new jobs created in November rose to 336,000 from 245,000. Job gains in October were revised to 654,000 from 610,000.
Big picture: The US economy was not as badly affected by the coronavirus outbreak in late 2020 as it was in the initial attack last spring.
Yet the momentum has clearly slowed. Economic growth and hiring is unlikely to accelerate until vaccinations become more widespread and the pandemic subsides. 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 narrow concentration of losses from the restrictions keeps a positive light on the possible post-vaccination recovery,” said senior economist Sal Guatieri from BMO Capital Markets.
“It’s a pause in the recovery, not a complete stall,” said chief economist Chris Low of FHN Financial.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
opened slightly higher in Friday trades.
Investors are banking on a stronger economy in 2021, helped by more federal stimulus from a Democratic president and a Democratic-controlled Congress.
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