Today’s jobs report for December tells the story of an economy still reeling from the surge in COVID cases. The Bureau of Labor Statistics reports,
Total nonfarm payroll employment declined by 140,000 in December, and the unemployment rate
was unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today. The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic. 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.
The Wall Street Journal reports the decline was led by the hard-hit hospitality sector.
Restaurants and bars drove the decline by cutting 372,000 jobs last month, the Labor Department said Friday. The broader category of hospitality and leisure industries—which adds hotels, museums, tourist sites—also saw losses, while schools and governments cut jobs as the pandemic triggered new restrictions on activity.
Jobs gains in most other industries weren’t enough to offset the sharp decline in areas sensitive to the state of the pandemic.
The WSJ writes that economists are cautiously optimistic.
Economists believe a new period of job losses will be temporary, though they differ on how long it will last. Some say that if virus infections peak soon, as expected, and if businesses reopen as more people get vaccinated, restaurants and other businesses could rehire quickly this spring.
“With employment in most other sectors rising strongly, the economy appears to be carrying more momentum into 2021 than we had thought,” Michael Pearce, senior U.S. economist at Capital Economics, said in a note to clients.
The surge is one of three factors explaining the decline and sluggish growth preceding it.
There are at least three main factors behind the jobs slowdown. A resurgence in coronavirus infections has caused states and cities to impose new restrictions on businesses, such as earlier curfews and business closures, and caused some consumers to stay indoors. Second, the onset of cold weather has limited the ability of businesses, particularly restaurants, to continue to host patrons outdoors. Third, earlier efforts by Congress and states to aid businesses—such as stimulus checks and additional unemployment compensation—faded before a new aid package was signed into law at the end of December.
CNBC points out this is the first monthly decline in employment since April.