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The numbers: The U.S. lost jobs in December for the first time in eight months as the coronavirus bore down on the economy again and forced businesses to resort to more layoffs.
The government and private sector shed 140,000 jobs last month, the Bureau of Labor Statistics said Friday.
The decline in employment was the first since last April, when the U.S. lost a gargantuan 20.8 million jobs in that one month alone.
The economy is still missing some 10 million jobs that existed before the onset of the pandemic, with little prospect that they’ll be recovered any time soon.
Empty patio tables at a drive-in diner in California . The coronavirus is costing the economy jobs again.
AFP via Getty Images
If there was a glimmer of goods news in the report, layoffs were concentrated at restaurants and other businesses the rely on large crowds of customers. Many other segments of the economy actually post strong employment gains last month.
The official unemployment rate, meanwhile, was unchanged at 6.7%. Yet economists estimate true unemployment is several points higher because the official jobless rate doesn’t include about 4 million people who left the labor force last year.
Read: Jobless claims still very high at the end of 2020
“People dropping out of the labor force is a big problem,” said Thomas Barkin, president of the Federal Reserve.
In early trades, U.S. stocks rose slightly. The Dow Jones Industrial Average DJIA, +0.12% set a new record on Thursday as investors look past the current economic difficulties to better times later in the year as more people get vaccinated.
What happened: Employment sank by 372,000 at bars and restaurants as customers shied away and many states reimposed business restrictions in an effort to slow a record increase in coronavirus cases nationwide.
Many firms had to lay off workers for a second or third time and some even had to close for good.
Jobs in recreation — theme parks, casinos and the like — also declined by 92,000 and the hotel industry culled 24,000 positions.
Added to the job losses, employment declined by 63,000 in private education and 45,000 in government.
The news was not all bad: Employment rose in a number of other major segments of the economy.
Hiring rose by 161,000 in white-collar professional ranks, for instance, and 121,000 at retail stores, though the increase in retail employment was likely exaggerated by seasonal swings.
Construction companies also added 51,000 jobs amid a boom in home sales while manufacturers added 38,000 workers to their payrolls. And employment increased by 47,000 among shippers and transportation companies who are delivering more packages than ever to homes and businesses.
Hiring was also stronger in November and October than previously reported. The number of new jobs created in November was raised to 336,000 from 245,000. Job gains in October were revised up to 654,000 from 610,000.
Big picture: The U.S. economy hasn’t been hurt nearly as badly by the coronavirus outbreak at the end of 2020 as it was during the initial onslaught last spring.
Yet momentum has clearly slowed. Economic growth and hiring are unlikely to speed back up again until vaccinations are more widespread and the pandemic peters out. Unemployment is expected to remain high at least until the summer.
What they are 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 at BMO Capital Markets.
“This is a pause in the recovery, not a full-on stall,” said chief economist Chris Low of FHN Financial.
Market reaction: The Dow Jones Industrial Average DJIA, +0.12% and S&P 500 SPX, +0.47% opened slightly higher in Friday trades.
Investors are banking on a stronger economy in 2021, aided by more federal stimulus from a Democratic president and Democratic-controlled Congress.
