This morning, Friday, December 8, 2021, the U.S. Labour Department released its December 2020 jobs report. There is a number of things to take note of but more notable is the fact that the job growth turned negative in December for the first time since April, thanks to the COVID-19 pandemic.
December’s drop in payrolls widened the employment deficit in the labour market from before the pandemic, bringing the economy still more than 9.8 million payrolls short of its February levels. This came even as the department upwardly revised a combined 135,000 payroll gains for each of October and November.
Prior to the release of this report, consensus economists had braced for a further slowing in job growth at the end of the year as new virus-related restrictions dulled employment and businesses awaited support from Congress’ latest stimulus package that was finally passed in the tune of $900 billion in the final week of December.
“The decline in payroll employment reflects the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic,” the report by the Labour Department reads in part.
The survey week for the December jobs report took place over the 12th of the month, during a record surge in national coronavirus cases and before Congress passed the $900 billion stimulus package.
The package that was extensively debated and negotiated by the Republicans, Democrats, and the White House extended federal unemployment programs and offered augmented jobless benefits and small-business aid. That week, initial jobless claims surged to their highest in three months to nearly 900,000, suggesting a jump in layoffs in December.
Daniel Zhao, the Senior Economist at Glassdoor, said this about this report:
“Today’s report is a harsh reminder that the pandemic controls our economic trajectory. Though the end-of-year relief bill offered a temporary reprieve and the start of vaccine distribution offers light at the end of the tunnel, we’re not out of the woods yet.”
The most affected job sector is the service sector. Leisure and hospitality employment dropped by 498,000 jobs during December after gaining 340,000 between October and November, and the industry group remains nearly 4 million payrolls short of its February levels. Education and health services payrolls sank by 31,000 jobs in the last month of the year.
Modest job gains in other industries did little to offset these sharp declines. Professional and business services jobs increased by 161,000 in December, and manufacturing jobs increased by 38,000 to come in at more than double the consensus estimate.
Both the unemployment rate and labour force participation rate remained unchanged in December from November, at 6.7% and 61.5%, respectively. Of those unemployed, those classified as being on a temporary layoff rose by 277,000 to 3.0 million in December, holding higher by 2.3 million compared to February.
As of the end of the year, nearly 4 million fewer Americans were working or looking for a job compared to February as the pandemic continued to restrain the size of the U.S. workforce.
On Tuesday, January 5, 2021, Wells Fargo economist Jay Bryson said in a note:
“Health concerns about contracting COVID and the need to quarantine or take care of someone else who is sick has kept millions out of the workforce at any given time since the pandemic, particularly older workers.
“Parents juggling remote-learning and day-care closures have also found it difficult to continue working or searching for a job. Nearly 1 million parents with children under the age of 18 were not in the labour force in November specifically because of the pandemic.”
“And of course, a lack of job opportunities — as there are nearly 10 million fewer jobs today than back in February — has also contributed to millions of workers remaining on the sidelines of the labour market.”
The incoming Biden-Harris administration is expected to fight and work hard to tame the COVID-19 pandemic that has ravaged the country and affected almost all sectors of its economy. The speedy rollout of the COVID-19 vaccine is seen as the first step to doing so.