The numbers: The United States lost jobs in December for the first time in eight months, while the coronavirus affected the economy again and forced companies to resort to more layoffs.
The government and the private sector cut 140,000 jobs last month, the Bureau of Labor Statistics said on Friday.
The decline in employment was the first since last April, when the United States lost 20.8 million gigantic jobs in that month alone.
The economy still lacks about 10 million jobs that existed before the pandemic started, with little prospect that they will be recovered soon.
Empty patio tables at a California drive-in cafeteria. The coronavirus is costing the economy jobs again.
AFP via Getty Images
If there was a glimpse of goods news in the report, the layoffs focused on restaurants and other businesses that depend on large crowds of customers. Many other segments of the economy have seen strong job gains in the past month.
The official unemployment rate, in turn, 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 claims still very high at the end of 2020
“Abandoning the workforce is a big problem,” said Thomas Barkin, president of the Federal Reserve.
In early trading, US stocks rose slightly. The Dow Jones Industrial Average DJIA,
set a new record on Thursday, when investors look beyond current economic difficulties to better times later in the year, as more people get vaccinated.
What happened: Employment fell by 372,000 in bars and restaurants as customers dodged and many states imposed restrictions on business in an effort to slow the record increase in coronavirus cases across the country.
Many companies have had to fire workers a second or third time and some have even closed down permanently.
Recreation jobs – theme parks, casinos and the like – also declined by 92,000 and the hotel industry cut 24,000 vacancies.
In addition to job losses, employment decreased by 63,000 in private education and 45,000 in government.
The news was not all bad: employment increased in several other important segments of the economy.
Hiring has increased by 161,000 white-collar professionals, for example, and by 121,000 in retail stores, although the increase in retail employment has probably been exaggerated by seasonal fluctuations.
Construction companies also created 51,000 jobs amid a boom in home sales, while manufacturers added 38,000 workers to their payrolls. And employment has increased by 47,000 among shippers and transportation companies that are delivering more packages than ever before to homes and businesses.
Hiring was also stronger in November and October than previously reported. The number of new jobs created in November increased from 245,000 to 336,000. October job gains were revised to 654,000 from 610,000.
General picture: The U.S. economy was not as affected by the coronavirus outbreak in late 2020 as it was during the initial attack last spring.
However, the momentum clearly waned. It is unlikely that economic growth and hiring will accelerate again until vaccinations are more widespread and the pandemic decreases. Unemployment is expected to remain high until at least the summer.
What are they saying? “This is a major setback for the labor market and the economy, but the narrow concentration of losses due to restrictions keeps a positive light on the eventual post-vaccine recovery,” said senior economist Sal Guatieri of BMO Capital Markets.
“This is a break from recovery, not a total stop,” 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’s trading.
Investors are betting on a stronger economy in 2021, with the help of more federal stimulus from a Democratic president and Democratic-controlled Congress.