December Jobs Report Shows Payroll Decline

For the first time since last April, payroll jobs in the US declined in December by 140,000.

The loss was almost completely driven by a decline of a half million jobs in leisure and hospitality, clearly driven by the upsurge in coronavirus cases. This was more than enough loss to offset employment growth in other industries – notably in retail trade (by 120,000) and professional services (161,000).

Declining employment was also observed in education (about -60,000) and government (-45,000) – with the former likely reflecting virus concerns that limit school openings and the latter reflecting very tight budgets at the state and local levels.

The household employment data were mostly flat, with unemployment and labor force participation staying constant. But there was an upsurge in new short-term unemployment as over 280,000 people reentered the workforce. The numbers of unemployed workers on permanent layoff declined a bit, presumably as some found new jobs.

As virus caseloads and deaths continue to rise in the US, and will likely do so over the next few months, we should anticipate flat or declining employment numbers. The modest stimulus package passed by Congress in December will help a bit, and perhaps a new Congress and President will generate more help. As more Americans get vaccinated, the labor market recovery should resume in the spring.

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