WASHINGTON: US private companies shed workers in December for the first time in eight months as out-of-control COVID-19 infections unleashed a fresh wave of business restrictions, setting the tone for what is likely to be a brutal winter for the economy.
The ADP National Employment Report on Wednesday showed job losses across all industries last month as the coronavirus outbreak kept many consumers and workers at home. While the report underscored the magnitude of the crisis, the economy was unlikely to slide back into recession, thanks to additional fiscal stimulus approved in late December.
The ADP report added to slumping consumer spending and persistently high layoffs in suggesting that the economy lost significant momentum at the end of 2020.
Private payrolls decreased by 123,000 jobs last month, the first decline since April, after increasing 304,000 in November. Economists polled by Reuters had forecast private payrolls would rise by 88,000 in December.
The ADP report is jointly developed with Moody’s Analytics. Though it has a spotty record predicting the government’s private payrolls count because of methodology differences, it is still watched for clues on the labor market’s health.
COVID-19 cases in the United States have jumped to more than 20 million, with the death toll exceeding 352,000 since the virus first emerged in China in late 2019, according to the US Centers for Disease Control and Prevention.
In addition to the virus, the labor market has been constrained by government delays in providing another relief package for businesses and the unemployed.
More than $3 trillion in fiscal stimulus helped companies to rehire workers and keep others on payrolls. It also assisted millions of unemployed and underemployed Americans to pay bills and maintain spending, leading to record economic growth in the third quarter. Nearly $900 billion in additional government rescue money was approved in late December.
Manufacturing shed 21,000 jobs in December, while payrolls in the private services industry dropped by 105,000. There were 13,000 job losses among small companies. Large companies payrolls decreased by 147,000. Medium-sized companied hired 37,000 workers last month.
The ADP report was released ahead of the government’s closely watched, and comprehensive, monthly employment report on Friday. According to a Reuters survey of economists, private nonfarm payrolls likely increased by 100,000 jobs in December after rising by 344,000 in November.
With government payrolls expected to have been unchanged last month, overall nonfarm payrolls are forecast increasing by 100,000 jobs after rising by 245,000 in November. That would the smallest gain since the jobs recovery started in May and mean the economy recouped about 12.5 million of the 22.2 million jobs lost in March and April.
Comments
Comments are closed for this article.