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Job growth slumped in December as COVID-19 surged

by Insuredwell
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Hiring fell in December for the first time since April, as the coronavirus rampaged across the nation and restaurants and bars closed their doors.

Employers cut 140,000 jobs, the Labor Department said Friday. The unemployment rate stayed flat at 6.7%.

Leisure and hospitality companies were the hardest hit, with the sector losing nearly half a million jobs last month. That drop was offset by hiring in professional and business services, retail and construction.

“The 140,000 drop in non-farm payrolls was entirely due to a massive plunge in leisure and hospitality employment, as bars and restaurants across the country have been forced to close in response to the surge in coronavirus infections,” Michael Pearce of Capital Economics said in a note. 

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With the viral spread limiting people’s movement and consumer spending barely growing over the past few months, most public-facing businesses have little incentive to hire. The economy still has nearly 10 million fewer jobs than it did before the pandemic sent it into a deep recession nearly a year ago.

“Payrolls are still 9.8 million short of pre-crisis levels, leaving us in a deep economic hole, and today’s report shows that we’re digging ourselves deeper into the hole,” Daniel Zhao, senior economist at the career site Glassdoor, said in a report.

In a hopeful sign for the economy, employment in sectors outside of leisure and hospitality rose strongly last month, Pearce noted. That suggests large swaths of the labor market remain resilient despite the coronavirus.

Many economists, including policymakers at the Federal Reserve, think a broad recovery will take hold in the second half of the year once the COVID-19 vaccine is widely distributed. For now, delays in rolling out the vaccine could drag down growth longer than expected, analysts said.

This is a developing story. The Associated Press contributed reporting.

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