The U.S. private sector unexpectedly shook off jobs in December as employment trends across the country weakened sharply before Congress passed its latest virus relief package.
According to the ADP’s careful report, private payrolls fell by 123,000 during the last month of 2020, the first monthly drop since April. This followed a revised increase of 304,000 jobs in November. According to Bloomberg data, consensus economists will see 75,000 jobs return in December.
The service delivery sector has been hit hard again after a brief delay in recent months, as stricter closure measures across the country have come into effect again. It starts mid-November. Recreation and hospitality industries lost 58,000 payrolls in December, followed by trade and transportation industries with a decline of 50,000. The manufacturing industries also lost 21,000 private payrolls in December, producing the recent recovery of the goods sector. The industries that experienced net salary increases during December – including business services and education and health services – achieved only modest increases.
“America’s amazing work machine has had a wall of increasing coronavirus cases and obstacles that jeopardize the entire economic recovery from recession,” Chris Rupkey, chief financial officer of MUFG Union Bank, said in an email Wednesday morning. ‘At the heart of every recession is the loss of jobs, and at the moment the decline in jobs at the end of the year indicates that the dark days of the labor market have arrived again last year. A new government returns to Washington and lawmakers are going to have their hands full because it looks like economic weakness is back again. ”
The latest ADP payroll report is two days ahead of the monthly salary report for the Labor Department, but was an unreliable predictor of the results in the government report in the course of the pandemic due to differences in the survey methodology. In the ADP report, only individuals on an active payroll are counted as employed, while the Labor Department counts every person who received a salary during the week for the report.
In October, for example, ADP reported that the economy suffered only 403,900 private payrolls, while the Labor Department reported an increase of 877,000. However, the subtitle of ADP was slightly less dramatic in November.
But one theme was consistent in virtually all recent job data: Appointment weakened especially in the last month of the year and layoffs increased again. New weekly demands for unemployed people jumped to a three-month high during December, staying at more than 800,000 a week for most of the month, as increasing cases of COVID-19 and colder weather caused the work.
As of Wednesday morning, the median economist is still looking for non-farming salaries to rise modestly in the Labor Department’s work report in December, according to Bloomberg data. But beyond the consensus estimate, a number of individual economists expected the Department of Labor to report its first decline in salaries in eight months, similar to the ADP pressure.
At the end of the month, however, Congress approved a $ 900 billion stimulus package, which includes additional unemployment benefits, as well as supplemental funds for the Paycheck Protection Program (PPP). Loans under the PPP are going to help businesses across the country keep their workforce employed, and offer a lifeline to companies as they wait for a widespread reopening once the vaccine distribution spreads.
“COVID-19 is likely to have a significant impact on the economy by the end of the year,” JPMorgan economist Bruce Kasman said in a recent note. ‘But we are now seeing more momentum than we expected to move towards this weakening [with] support for fiscal policy that is coming faster than we previously believed. ”
“Vaccines are still being rolled out in the US, and we think the combination of fiscal support and better control of COVID-19 will yield strong growth by mid-2021,” he added.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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