US economy shed 140,000 jobs in December
The decline was the first since April
New York — 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 prior month, according to a labour department report Friday that bucked economists’ forecasts for a modest gain of 50,000. The unemployment rate was unchanged at 6.7%, halting a string of seven straight drops.
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 $900bn package approved in December — after Democrats’ victories in Georgia runoff elections that gave the party control of the Senate.
“The report is remarkably weak with regards 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.”
US stocks rose at the open on Friday on bets that more stimulus is coming, while Treasuries fell, lifting the 10-year rate to about 1.10%. The Bloomberg dollar index also dropped.
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 SA, 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 rose, prompting some states to tighten business restrictions that led to a rise 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. The US suffered more than 4,000 coronavirus deaths in a single day for the first time on Thursday.
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.
The number of long-term unemployed — those jobless for 27 weeks or more — edged up to 3.96-million. Long spells of unemployment can make it more difficult for workers to get re-employed, earn higher wages and prevent skills atrophy.
Private-sector payrolls — which exclude government jobs — decreased 95,000 during the month after a 417,000 gain in November. State and local government jobs declined by about 51,000 in December, which could also bolster hopes for aid to such entities.
The unemployment rate declined for black and Asian Americans but ticked up slightly for white Americans. Hispanic Americans saw the biggest monthly increase in their jobless rate, rising from 8.4% to 9.3%.
At the same time, the participation for black, Hispanic and Asian Americans also declined, while it rose slightly for white workers.
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