- The US lost 140,000 jobs in December, the Bureau of Labour Statistics said Friday. That ran counter to economist estimates that foresaw 50,000 payroll additions.
- The figure also signalled a reversal from the revised 336,000 job additions seen in November.
- The result ends a seven-month streak of payroll additions for the US labour market and reflects a slowdown in the US economic recovery.
- The unemployment rate stayed steady at 6.7% last month, coming in below the consensus economist forecast of 6.8%.
- While still-soaring coronavirus cases threaten to cut further into the pace of recovery, new fiscal stimulus and vaccine distribution lift hopes for a full recovery.
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The US economy saw a surprise decline in payrolls in December as stricter COVID-19 lockdown measures extended the nation’s unemployment crisis into the new year.
American businesses shed 140,000 nonfarm payrolls last month, the Bureau of Labour Statistics said Friday. The reading defies consensus economist estimates that foresaw 50,000 job additions, according to Bloomberg data. It’s also a sharp reversal from the 336,000 payrolls added in November.
The country’s unemployment rate stayed steady at 6.7% in December, the agency said. That’s slightly lower than the median economist estimate of 6.8%. The rate’s pace of decline moderated through the end of the year after tumbling from its 14.7% peak at the start of the pandemic.
The Friday data ends a seven-month streak of payroll additions for the US labour market and reflects a slowdown in the US economic recovery. More than 10 million Americans remain unemployed, leaving considerable progress left before the economy returns to pre-pandemic health.
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Inside the numbers
The bureau’s monthly report offers the most detailed look at how hiring slowed amid soaring COVID-19 case counts and new economic restrictions. About 4.6 million Americans said the coronavirus was the main driver for their not seeking employment. That’s up from 3.9 million in November.
Roughly 15.8 million Americans cited the health crisis as the primary reason their employer ended operations, up from 14.8 million people the month prior.
The share of Americans telecommuting climbed 1.9 percentage points to 23.7% in December. The shift is likely a result of governments enacting increasingly strict lockdown measures around the country to slow the coronavirus’ spread.
The number of temporary layoffs rose to 3 million from 2.8 million. The reading is down considerably from the April peak of 18 million but remains about 700,000 below pre-pandemic lows.
The distribution of COVID-19 vaccines suggests permanent hires can rebound in the coming months. Yet the millions of Americans left without work for months stand to leave lasting scars in the labour market.
Revived stimulus hopes
Friday’s data shows a labour market on the brink of a second downturn, yet developments throughout last month reveal a potential end to the pandemic and its economic toll. For one, COVID-19 vaccines began to roll out to first responders and older Americans, marking a beginning to the health crisis’ end.
President Donald Trump signed a $US900 billion relief package at the end of the month. The measure contained $US600 direct payments for most Americans, bolstered federal unemployment benefits, and included food and rental assistance.
Democrats’ recent victories in Georgia suggest additional relief funding may soon arrive. Jon Ossoff and Raphael Warnock’s victories give Democrats unified control of the government for the first time since 2011 and pave the way for President-elect Joe Biden to pursue more progressive economic policy.
The Biden administration is considering a two-pronged approach to new stimulus that includes another round of direct payments and a $US3 trillion tax and infrastructure plan, Axios reported Thursday. Stocks rose to record highs throughout the week amid hopes that fresh fiscal aid could better revive the economy as it gradually reopens.
“Given the accelerated rise in coronavirus cases recently and the associated drop back in activity, this was not entirely unexpected,” Seema Shah, the chief strategist at Principal Global Investors, said. “With a Blue sweep controlling Congress, further fiscal stimulus is the name of the game and today’s data will only assist that agenda.”
In the meantime, daily COVID-19 case counts remain at dire highs. The US reported 266,197 new cases on Thursday, according to The COVID Tracking Project. Hospitalizations reached 132,370, and deaths rose to 356,229.
Other gauges of the labour market’s health also point to looming weakness. Weekly jobless claims fell slightly to 787,000 for the week that ended Saturday but remain at historically elevated levels. The reading ended a two-week streak of declines and came in just below the 800,000 claims expected by economists.
Continuing claims, which track Americans receiving unemployment benefits, dipped to 5.1 million for the week that ended December 26. Economists expected a reading of 5.2 million.
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