US economy loses jobs as pandemic pummels restaurants, bars

WASHINGTON: The US economy shed jobs for the first time in eight months in December as the country buckled under an onslaught of COVID-19 infections, suggesting a significant loss of momentum that could temporarily stall the recovery from the pandemic.

The plunge in nonfarm payrolls reported by the Labor Department on Friday was concentrated in the leisure and hospitality sector, with closures of bars and restaurants accounting for three quarters of the job losses.

But with other industries including retail, manufacturing and construction performing better, the economy is unlikely to fall back into recession. Nearly $900 billion in additional pandemic relief approved by the government in late December will probably provide a backstop.

Payrolls decreased by 140,000 jobs last month, the first decline since April, after increasing by 336,000 in November. The economy has recovered 12.4 million of the 22.2 million jobs lost during the pandemic. Economists polled by Reuters had forecast 77,000 jobs would be added in December.

The leisure and hospitality sector lost 498,000 jobs last month, with employment at bars and restaurants tumbling 372,000. There were also decreases in private education jobs and government employment. But retail employment rose by 121,000 jobs. Factories hired 38,000 workers and construction payrolls increased by 51,000 jobs.

There were also gains in employment in professional and business services, transportation and warehousing, health care and wholesale trade industries.

Weak payrolls joined a raft of other soft data on consumer confidence and spending in underscoring the brutal impact of the coronavirus on the economy, which sank into recession in February.

The unemployment rate was unchanged at 6.7% in December. It was, however, biased down by people misclassifying themselves as being “employed but absent from work.” Without this misclassification, the jobless rate would have been about 7.3%.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 61.5%. About 15.8 million people reported they were unable to work because of business closures or failures related to the pandemic, up from 14.8 million in November. With the virus hollowing out lower-wage industries, average hourly earnings surged 0.8% last month after gaining 0.3% in November. The average workweek dipped to 34.7 hours from 34.8 in November.

The economy is believed to have expanded at around a 5% annualized rate in the fourth quarter, with the bulk of the rise in gross domestic product seen coming from inventory investment. It grew at a historic 33.4% pace in the third quarter after shrinking at a 31.4% rate in the April-June period, the deepest since the government started keeping records in 1947.