Private wages in December have contracted for the first time since the start of the coronavirus pandemic, according to an ADP report on Wednesday.
The drop of 123,000 provided a sign that the US economy has cooled considerably by the end of 2020. Economists surveyed by the Dow Jones expected an increase of 60,000.
The December decline counteracted seven consecutive months of job growth that came out of the massive forums set up in March and April as large areas of the US economy were closed to combat the spread of Covid-19.
The companies laid off 19.4 million workers in April and recovered 9.9 million, according to ADP estimates, which sometimes differed greatly from the official balance of monthly wages within the Department of Labor. The December decline followed an increase of 304,000 in November, a revised number 3,000 less than the initial estimate.
At the industry level, the leisure and hospitality sector led to reductions of 58,000, as states and municipalities brought back restrictions on indoor dining, while outdoor dining became less practical with the onset of colder weather.
Almost all the layoffs came from companies employing more than 1,000 workers, as hotel and restaurant chains downsized.
Companies in this category have lost 169,000 employees, while small businesses with less than 20 employees, which are also part of the bar and restaurant industry, have reduced the number of heads by 16,000. Franchises have lost 5,300 positions and more discounts are likely, as Disney and Marriott announced big discounts in December.
Trade, transport and utilities reduced staff by 50,000, while the category of other services was shut down by 12,000 and intelligence services by 6,000. Also, production lost 21,000 positions, and education fell by 1,000.
Companies with between 50 and 499 employees added 37,000 jobs.
Growing industries included professional and business services (+12,000), education and health services (+8,000) and construction (+3,000).
The ADP report, which is compiled with Moody’s Analytics, comes two days before the December report on employment in the Department of Labor, which is estimated to show an increase of only 50,000 jobs after the increase of 245,000 in November .
For most of the pandemic, ADP estimates were below the government’s final number. Private wages added 344,000 in November, according to the Department of Labor, 40,000 higher than the final ADP number.