The numbers: The U.S. lost jobs for the first time in eight months in December because the coronavirus once again hurt the economy and forced businesses to go for more layoffs.
The government and the private sector laid off 140,000 jobs last month, the Bureau of Labor Statistics said Friday.
The decline in employment was the first since last year in April, when the US lost a whopping 20.8 million jobs in just one month.
The economy is still missing about 10 million jobs that existed before the start of the pandemic, with little prospect of it being restored any time soon.
Empty patio tables at a drive-in eatery in California. The coronavirus is costing the economy jobs again.
AFP via Getty Images
If there was a glimpse of news about goods in the report, layoffs were concentrated at restaurants and other businesses that rely on large customers. Many other parts of the economy actually rose sharply last month.
The official unemployment rate has meanwhile remained unchanged at 6.7%. However, economists estimate that real unemployment is several points higher because the official unemployment rate does not include about 4 million people who left the labor force last year.
Read: Unemployment demands are still very high at the end of 2020
“People falling out of the workforce are a big problem,” said Thomas Barkin, president of the Federal Reserve.
In early trading, US equities rose slightly. The Dow Jones Industrial Average DJIA,
set a new record on Thursday as investors look beyond the current economic problems to better times later in the year as more people are vaccinated.
What happened: Employment fell at bars and restaurants by 372,000, while customers scrambled away and many states reintroduced trade restrictions in an effort to slow a record increase in coronavirus cases nationwide.
Many businesses had to lay off workers for a second or third time and some even had to close forever.
Recreational jobs – theme parks, casinos and the like – also declined by 92,000 and the hotel industry eliminated 24,000 jobs.
In addition to the job losses, jobs decreased by 63,000 in private education and 45,000 in government.
The news was not bad: jobs rose in a number of other important parts of the economy.
For example, the appointment rose by 161,000 in white-collar professional ranks and by 121,000 in retail stores, although the increase in retail employment was likely exaggerated by seasonal fluctuations.
Construction companies also added 51,000 jobs amid a surge in home sales, while manufacturers added 38,000 workers to their payrolls. And employment has increased by 47,000 among distractors and transport companies delivering more packages than ever to homes and businesses.
Rentals were also stronger in November and October than previously reported. The number of new jobs created in November increased from 245,000 to 336,000. Profits in October were revised from 610,000 to 654,000.
Big picture: At the end of 2020, the US economy was not nearly as badly injured as during the initial onslaught last spring.
Yet the momentum clearly slowed. Economic growth and rents are unlikely to accelerate again until vaccinations become more widespread and the pandemic worsens. Unemployment is expected to remain high until the summer.
What are they saying? “This is a major setback for the labor market and the economy, but the close concentration of losses due to constraints holds a positive light on the eventual recovery after vaccination,” said senior economist Sal Guatieri at BMO Capital Markets.
“This is a break in recovery, not a complete stall,” said FHN chief economist Chris Low.
Market reaction: The Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
opened slightly higher in Friday trading.
Investors are banking on a stronger economy in 2021, aided by more federal stimulus from a Democratic president and a Democratic-controlled Congress.