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 disrupt the recovery from the pandemic.
The plunge in nonfarm payrolls reported by the Labor Department was concentrated in the coronavirus-sensitive leisure and hospitality sector, which lost nearly half a million jobs. But with other industries including retail, manufacturing and construction performing better, the economy is unlikely to tip back into recession.
Nearly $900 billion in additional pandemic relief approved by the government in late December will probably provide a backstop. More fiscal stimulus is expected now that Democrats have gained control of the U.S. Congress, boosting the prospects for President-elect Joe Biden’s legislative agenda. There is also optimism the rollout of coronavirus vaccines will be better coordinated under the incoming Biden administration.
Congress on Thursday formally certified Biden’s victory in the Nov. 3 election, hours after hundreds of President Donald Trump’s supporters stormed the US Capitol. The employment report is one of the final scorecards delivered during the Trump presidency and stands as a reminder of the tumultuous economic crisis that marked his last months in office.
“This is a pause in the recovery, not a full-on stall,” said Chris Low, chief economist at FHN Financial in New York.
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 71,000 jobs would be added in December.
COVID-19 cases in the United States have jumped to more than 21 million, with the death toll exceeding 365,000, according to a Reuters analysis. The economy ended 2020 with 9.4 million fewer jobs.
The leisure and hospitality sector lost 498,000 jobs last month, with employment at bars and restaurants tumbling 372,000, accounting for three quarters of the drop. Restaurants and bars in many states, including New York and California, were shut during the holidays to slow the spread of the virus.
Excluding the leisure and hospitality sector, payrolls rose at roughly the same pace as in November.