Job creation was halted in December, when restrictions caused by the increase in Covid-19 cases affected virus-sensitive industries, particularly bars and restaurants, which lost nearly half a million jobs in the month.
The Labor Department reported on Friday that the non-farm payroll fell by 140,000. This was below the expectations of 50,000 economists surveyed by Dow Jones.
The unemployment rate was 6.7%, compared to an estimate of 6.8%. An alternative measure of unemployment that includes discouraged workers and those with part-time jobs for economic reasons has decreased from 12% to 11.7%.
Markets, however, ignored the report, probably in the hope that it would strengthen the case for further stimulus from Congress and reflect a likely temporary reduction in jobs that would be reversed by accelerating the distribution of the Covid vaccine.
Since a recovery started in May, the economy had recovered 12.3 million of the jobs lost. The greatest success came in the hospitality industry, where hotels, restaurants and bars suffered under the yoke of restrictions that limited travel, meals and drinks.
The sector had a drop of 498 thousand positions in the month, with the majority coming from restaurants and bars, which had a drop of 372 thousand. Overall, hospitality has dropped 3.9 million jobs since January, down 23.2%, according to the Bureau of Labor Statistics report.
The summer saw many restrictions on facility limits lifted, but has been reimposed in recent months, as coronavirus cases have increased and states and communities have once again eliminated or restricted indoor meals and drinks.
When an extraordinary year came to an end, with around 22 million workers laid off in March and April, the labor market was showing a strong recovery that, however, left about half of the displaced on the sidelines.
Private education also declined by 63,000, while public jobs contracted again with the loss of 45,000 vacancies. The other category of services fell by 22,000.
Professional and commercial services grew by 161,000, while retail added 121,000 during the holiday shopping season and construction contributed 51,000.
Transport and storage also totaled 47,000 and healthcare increased by 39,000.
This impact on the labor market occurs although economic growth looks solid in the fourth quarter. The Atlanta Fed’s GDPNow tracker sees the U.S. economy accelerating 8.5% in the last three months of the year, although economists expect the first quarter of 2021 to show little or no growth.
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