Unemployment Update: US economy lost 140,000 jobs in December

Unemployment Update: US economy lost 140,000 jobs in December
Image Source

For the first time in seven months, the US job market recovery halted in December, with the economy losing 140,000 jobs during the month.

According to a Bureau of Labor Statistics (BLS) report, the US economy shed 140,000 jobs in December, which was worse than economists’ forecasts. This caused the unemployment rate to remain flat at 6.7%, marking a halt in the job market recovery in seven months.

Job losses in the US

The bureau’s data indicated that during the month of December, the jobless rates increased for Hispanic workers, teenagers and women. The BLS attributed the worsening labor market conditions to the surge in coronavirus cases, along with the containment measures states were forced to undertake.

The report also showed that the leisure and hospitality industry, which is considered the hardest hit by the pandemic, lost almost half a million jobs during the month, mostly those working in restaurants and bars.

Since prior to the pandemic, the industry has lost 3.9 million jobs, or 23.2%.

ADVERTISEMENT

In November, the BLS monthly jobs report indicated that 638,000 jobs were added in October but the US is still down approximately 10 million jobs since the onset of the coronavirus pandemic in February.

Aside from the additional jobs, the report also indicated that the unemployment rate went down from 7.9% in September to 6.9% in October. The rate drop beat economists’ consensus estimate of 7.7% for the month.

The decline was a result of numerous workers returning to their jobs, as demonstrated by a decrease in the number of people on temporary layoff, and slight change in the number of permanently unemployed workers.

Meanwhile, in December, an additional 885,000 people filed for first-time unemployment benefits in the US last week, 800,000 claims higher than economists predicted.

On a more positive note, continuing claims, which refer to the total number of Americans seeking jobless benefits, has declined to 5.5 million.

However, during that time, over 20.6 million people have filed for some form of government unemployment benefits in the past four weeks as of November 28, which represent an over 1.6 million increase from the week prior.

Additionally, more than 14 million people had filed for benefit claims under two of the US government’s pandemic-related unemployment programs, which are scheduled to end at the end of the year unless the government extends them.

Outlook on the US job market

However, Sal Guatieri, senior economist at BMO, pointed out that since the job losses were concentrated, recovery in other economic areas is still proceeding. Guatieri mentioned that in the retail industry, there were 121,000 additional jobs in December.

Glassdoor’s Senior Economist Daniel Zhao said: “I think there is a case for cautious optimism. If losses are mostly contained to temporary layoffs, then targeted aid might be able to bridge the gap until there’s mass vaccination.”

The US employment-population ratio was at 57.4% in December, remaining unchanged from the previous two months. This could mean that real improvements, proportionate to the population, was nowhere to be found for the entire fourth quarter.

Gregory Daco, chief US economist at Oxford Economics, explained: “While these bleak numbers represent a weak handoff to 2021, the labor market recovery is expected to strengthen over the spring and summer as vaccinations lead to a gradually improving health situation.”

ADVERTISEMENT