U.S. loses 140,000 jobs in December as COVID-19 spikes stall labor market recovery
U.S. employers slashed 140,000 jobs in December, the first monthly decline in employment since April 2020, as recent COVID-19 spikes stall labor market recovery - the Labor Department, Trend reports citing Xinhua.
"The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic," the department's Bureau of Labor Statistics (BLS) said in its monthly employment report.
Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis that the "uneven impact" of the virus on high-contact services and jobs where it is easier to socially distance was "on full display."
Employment in leisure and hospitality declined by 498,000, with three-quarters of the decrease in food services and drinking places, by 372,000, the BLS report noted. Since February 2020, employment in leisure and hospitality has been down by 3.9 million, or 23.2 percent.
Employment in private education, meanwhile, decreased by 63,000 in December, the report showed, noting that employment in the industry has fallen by 450,000 since February.
Government employment also declined by 45,000 in the month. Since February, government employment overall has been cut by 1.3 million.
In December, job losses in leisure and hospitality and in private education were partially offset by gains in professional and business services, retail trade, and construction, according to the bureau's report.
The report also showed that growth in total nonfarm payroll employment for October was revised up by 44,000 to 654,000, and the gain for November was revised up by 91,000 to 336,000.
Amid widespread COVID-19 shutdowns in March and April last year, 22 million Americans lost their jobs. The latest data showed that the number of unemployed in December remained unchanged at 10.7 million, which is about 5 million higher than pre-pandemic level in February 2020.
The unemployment rate, which has been trending down over the past seven months, remained unchanged at 6.7 percent in December, the report showed, indicating the disruption to the labor market recovery by resurgent pandemic.
The unemployment rate in December was down by 8 percentage points from its recent high in April 2020 but is 3.2 percentage points higher than its pre-pandemic level in February, the bureau noted.
In an analysis published Friday, Peterson Institute for International Economics (PIIE) senior fellow Jason Furman and Harvard Kennedy School research associate Wilson Powell argued that the newly released official unemployment rate understates the level of joblessness by 1.9 percent.
Furman and Powell calculated that the "realistic unemployment rate" was 8.6 percent in December, taking into account workers who reported being "not at work for other reasons" and the unusually large decline in labor force participation.
They noted that the country saw an initial "partial bounce back" in the labor market in the late spring and summer, as the unemployment rate fell quickly at first as businesses reopened, but the pace of recovery has "slowed throughout the fall and has now reversed."
House added that the job loss in December corroborates the deteriorating jobs picture offered by the recent upward trend in jobless claims, the sub-50 reading from the Institute for Supply Management (ISM) services employment index and the drop in small business hiring plans.
Weekly initial jobless claims have been largely declining in the past few months, but the trend was recently reversed in the weeks ending Nov. 14 and Nov. 21, and then in the weeks ending Dec. 5 and Dec. 12 amid COVID-19 spikes.
The Services Purchasing Managers' Index (PMI) registered 57.2 percent in December, 1.3 percentage point higher than the November reading, according to the latest Services ISM Report on Business.
The employment index, however, fell by 3.3 percentage points to 48.2 percent, marking the first contraction after three consecutive months of growth, the ISM report showed.
House noted the latest round of COVID-19 relief is poised to help speed the labor market's recovery with additional Paycheck Protection Program (PPP) loans and targeted emergency grants helping small businesses retain more employees.
"Nevertheless, the next few months are likely to remain bleak in the jobs market as the pandemic continues to rage," she said.