US loses 140,000 jobs in first monthly decline since spring
U.S. employers shed 140,000 jobs in December amid COVID-19 surges and new business constraints, closing out a dismal year with the first payroll losses since the pandemic upended the economy last spring.
Restaurants and bars hemorrhaged jobs, and the report kicks off a potentially brutal winter as the nation awaits wide distribution of a vaccine that should pave the way for brighter days.
The unemployment rate, which is calculated from a different survey, held steady at 6.7%, the Labor Department said Friday.
The pandemic will likely continue to weaken the economy through winter and perhaps early spring, and further job losses are possible in the coming months. But many economists say that once coronavirus vaccines are more widely distributed, a broader recovery should take hold in the second half of the year. The incoming Biden administration, along with a now fully Democratic-led House and Senate, is also expected to push more rescue aid and spending measures that could accelerate growth.
Economists had estimated that 50,000 jobs were added last month, according to a Bloomberg survey.
Leisure and hospitality, including bars and restaurants, drove last month’s job losses, shedding 498,000 positions.
State and local governments, which are coping with massive pandemic-related revenue declines, lost about 50,000 jobs. Private education payrolls fell by 63,000. The losses more than offset surprisingly strong payroll advances in other sectors.
Professional and business services added 161,000 jobs. Retail added 120,000 amid the holiday shopping season, much of it at warehouse clubs and supercenters. Construction, which is benefiting from the housing boom, added 51,000. And manufacturing, which has been churning out a steady stream of appliances and other goods for consumers stuck at home, added 38,000.
The disappointing showing overall was also partly softened by upward revisions of 135,000 to job gains in Octo
ber and November.
Prior to December, job gains had slowed for five straight months since peaking at 4.8 million in June. The nation has recovered 12.3 million, or about 56%, of the 22.2 million jobs wiped out in the health crisis as restaurants, shops and other businesses shuttered by the outbreak were allowed to reopen, and the outlets brought back many furloughed workers.
But the rehiring has been offset by a resurgent virus across most of the country that’s sparking renewed restrictions on businesses, fewer visits by consumers who fear contagion and hundreds of thousands of layoffs. And the nation isn’t expected to fully recoup the remaining 9.8 million jobs eradicated in the outbreak until late 2023.
In recent weeks, daily coronavirus cases have hit fresh records amid holiday travel and gatherings, and colder weather. As a result, many states have barred indoor dining, reduced capacity limits at stores and restaurants or forced outlets to shut down completely.
About 25% of small businesses that were open in January 2020 were closed last month, according to Homebase, which provides employee scheduling software. The number of employees working was down 3% compared with a month earlier, the firm said.
The number of Americans on temporary layoff increased by 277,000 as restaurants scaled back services or closed. About 28% of unemployed workers said they were on temporary
layoff, up from 25% the previous month.
The ranks of workers permanently laid off fell to 3.4 million from 3.7 million.
The wide rollout of a vaccine by late spring should spark “a mini summer boom” and the recovery of about 6 million jobs, said Gregory Daco, chief economist of Oxford Economics.
“Last month’s decline in payrolls does not signal the beginning of a renewed downturn in the economy as a whole,” said economist Michael Pearce of Capital Economics.
Andrew Walcott had to furlough four employees at his restaurant, Fusion East in Brooklyn, just before Christmas, after New York state stopped allowing
indoor dining. He has shifted to takeout.
“That’s a hard sell when it’s snowing outside and it’s 25 degrees in New York City,” Walcott said.
In September, his restaurant was allowed to seat diners up to 25% of capacity. With that, along with takeout and delivery and a food truck, his revenue reached 60% of pre-pandemic levels.
But after last month’s layoffs, only Walcott himself, plus a manager and a head chef, with occasional part-time help, are left.
“It’s really horrible,” he said. “You still got to pay rent, you still got to pay insurance, you still got to pay real estate taxes. You still have fixed bills every month.”
Many of the nation’s 10.7 million jobless will be jostling for jobs during an arduous few months. The $908 billion relief bill recently passed by Congress is intended to contain the damage. It provides enhanced unemployment benefits to 14 million Americans and another round of forgivable loans to small businesses, as well as $600 checks to most individuals.
Still, the number of workers unemployed more than six months has risen to nearly 4 million and more than 100,000 small businesses have closed for good, leaving scars on the economy even after the vaccine rollout boosts activity and hiring picks up.