The US labour-market recovery faltered in December with the first decline in payrolls in eight months, as soaring coronavirus infections exacted a bigger toll on jobs and jeopardised the economy’s progress.
Nonfarm payrolls decreased by 140 000 from the prior month and the unemployment rate was unchanged at 6.7%, the Labour Department said on Friday. The median estimate in a Bloomberg survey called for a 50,000 increase in employment and a jobless rate of 6.8%.
The weakness largely reflected job cuts at restaurants and that could extend into Joe Biden’s first months in office, with the President-elect already inheriting an economy that’s down almost 10 million jobs compared with before the pandemic.
A new virus strain that led to new or extended lockdowns in the UK and Germany has been identified in the US, and if states or localities implement broader shutdowns, there could be more layoffs in the coming months.
The pace of hiring will be hard-pressed to accelerate until a meaningful portion of the general population is vaccinated, with distribution in the US running slower than planned and potentially holding back the recovery. Those getting vaccinated are essential workers or the elderly - people that either have already been working through the pandemic or are retired - which doesn’t lead to job gains in the immediate term.
In December, there were about 1.5 million new cases per week in the US and Covid-related deaths hit a record pace, prompting some states to tighten business restrictions that led to a pickup in layoffs.
Treasuries fell after the jobs report, pushing the yield on the 10-year up to around 1.10%, while the dollar got a brief bump higher.
For the full year, payrolls declined by 9.37 million in 2020, the most in records back to 1939 and exceeding the combined slump in 2008 and 2009 during the Great Recession and its aftermath.