December May Have Seen Shrinking Payrolls

The U.S. Department of Labor will report how many jobs were created in December tomorrow. The consensus seems to be around a 50,000 job gain but a number of economists/analysts believe it could be negative.

ADP is expecting employment to fall

ADP publishes its monthly employment estimates the Wednesday before the Labor Department announces them. ADP is forecasting that there were 123,000 fewer jobs in December, a break from the seven months of increasing employment. The sectors with the largest potential job losses are:

  • Leisure and Hospitality: Down 58,000
  • Trade, Transportation and Utilities: Down 50,000

With the sectors having the largest job gains:

  • Professional and Business: Up 12,000
  • Education and Healthcare: Up 8,000

Kathleen Bostjancic, Head U.S. Financial Market Economist at Oxford Economics, is expecting non-farm payrolls to have fallen by 24,000 in December. Even if the number is positive it should continue the trend of slowing job growth.

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Unemployment claims are slowly falling

Total initial unemployment claims fell for the third week in a row led by a 149,000 drop in Pandemic Unemployment Assistance from 310,000 to 161,000. Initial unemployment claims that are seasonally adjusted fell by 3,000 to 787,000; however, when they are not seasonally adjusted they rose by 77,400 to over 922,000.

PEUC or Pandemic Emergency Unemployment Claims (the red line in the chart below) fell from December 12 to December 19, but still remains above 4.5 million people receiving this assistance. Nancy Vanden Houten from Oxford Economics wrote, “Claims for state extended benefits — a last stop for many individuals — have been rising sharply. The jump is especially noteworthy since only 24 states are providing extended benefits. The extension of PEUC may ease the pressure on state programs temporarily.”

Since March initial unemployment claims have dramatically fallen

Compared to the initial weeks when the economy went into shutdown mode due to the coronavirus, initial unemployment claims have dramatically fallen. However, they have leveled off at numbers that are significantly higher pre-pandemic.

However, unemployment claims are still at historically high levels

But when viewed since 1967 and six previous recessions, even the current levels are significantly above any of the peaks of earlier economic downturns.

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