The American private sector Jobs unexpectedly laid off in December Employment trends fell sharply across the country before Congress passed the latest virus relief package.
Private payrolls fell 123K during the last month of 2020, according to a closely watched ADP report, marking the first monthly drop since April. This followed a revised increase of 304,000 jobs in November. Economists unanimously expected to see 75,000 jobs return in December, according to Bloomberg data.
The service provision sector has been hit hard again after a short delay in recent months, as stricter lockdown measures are back in place across the country starting in mid-November. The leisure and hospitality industries lost 58,000 jobs in December, followed by the trade and transportation industries, down 50,000. The manufacturing industries also lost 21,000 private payrolls in December, undoing some of the recent boom in the commodity production sector. Industries that experienced net salary gains in December – including business services, education, and health services – recorded only modest increases.
“The great American jobs machine has hit a wall of growing coronavirus cases and government shutdowns that are jeopardizing the full economic recovery from the recession,” Chris Robkey, chief financial economist at MUFG Union Bank, said in an email Wednesday morning. “The core of every recession is job loss and now the year-end job decline signals a return to the dark days of the labor market last spring. A new government will return to Washington and lawmakers will occupy their hands as economic weakness appears to have returned.
The latest ADP payroll report precedes the Labor Department’s monthly payroll report by two days, but it was an unreliable indicator of results in the government report over the course of the pandemic due to differences in survey methodology. With the ADP report, only individuals on active payroll are counted as employees, while the Department of Labor counts any individual who received a paycheck during the Survey week of the report.
In October, for example, the ADP reported that the economy only took 403,900 private jobs, while the Labor Department reported an increase of 877,000. However, the weakness of the ADP team was less dramatic in November.
But one theme has been consistent across nearly all of the recent jobs data: significantly weaker employment in the last month of the year and a resurgence of layoffs. New weekly jobless claims jumped to a three-month high during December and remained high at more than 800,000 a week for most of the month, as rising COVID-19 cases and cold weather hampered hiring.
As of Wednesday morning, the average economist was still looking for a modest increase in non-farm payrolls in December in the Labor Department’s jobs report, according to Bloomberg data. But outside the consensus estimate, a number of individual economists expected the Labor Department to announce its first salary drop in eight months, similar to the ADP print.
However, at the end of the month, Congress passed a $ 900 billion stimulus package, which included additional unemployment benefits as well as replenishment for the Payroll Check Protection Program (PPP). The loans are set up under a public-private partnership to help companies across the country maintain their workforce, providing a lifeline for companies awaiting a large-scale reopening once the vaccine distribution scale is expanded.
“COVID-19 will likely be a meaningful burden on the economy at the end of the year,” JP Morgan economist Bruce Casman said in a recent note. But we are now seeing more momentum than we expected with heading towards this weakness [with] The support from fiscal policy is coming faster than we previously thought. “
“Vaccines continue to be rolled out in the United States, and we believe the combination of financial support and better control of COVID-19 will generate robust growth in mid-2021,” he added.
Emily McCormick is a reporter at Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: