Job creation stopped in December as restrictions on the rise in Covid-19 cases affected virus-sensitive industries, especially bars and restaurants, which lost almost half a million jobs that month.
The Labor Department reported on Friday that non-farm wages fell by 140,000. This was below expectations for 50,000 economists surveyed by the Dow Jones.
The unemployment rate was 6.7%, compared to the estimate of 6.8%. An alternative measure of unemployment, which includes discouraged workers and those in part-time jobs for economic reasons, has fallen from 12% to 11.7%.
However, markets dropped the report, probably in anticipation of strengthening the argument for more stimulus from Congress and reflecting a likely temporary job cut that would be reversed as the distribution of the Covid vaccine accelerates. The shares were ready for a modest opening gain.
“In some ways, the bad news is good news because it increases the likelihood of a greater stimulus,” said Michael Arone, chief investment strategist for US SPDR Business. “Investors were convinced this week that, given what has happened in Georgia, given the weak economic data, there is more aid going on. We will receive more tax aid and it will probably happen soon enough.” .
Since a recovery that began in May, the economy has recovered 12.3 million jobs lost. The greatest success came in the hospitality industry, where hotels, restaurants and bars have suffered under the yoke of restrictions that limit travel, food and drink. The number of jobs in December showed that the impact has intensified.
The industry recorded a decrease of 498,000 positions per month, most coming in restaurants and bars, which recorded a decrease of 372,000. Overall, hospitality fell by 3.9 million jobs in January, down 23.2 percent, according to a report by the Bureau of Labor Statistics.
The summer has seen many of the restrictions on the limits of high units, but they have been re-imposed in recent months as coronavirus cases have increased, and states and communities have again eliminated or restricted mass and indoor drinks.
As an extraordinary year ended with about 22 million workers in March and April, the job market recovered sharply, leaving about half of those displaced on the sidelines. Apart from hospitality, other job losses were lower and a number of industries continued to make solid gains.
Private education also fell by 63,000, while government jobs contracted again with the loss of 45,000 jobs. The other category of services decreased by 22,000.
Professional and business services increased by 161,000, while retail added 121,000 during the shopping season, and construction contributed 51,000.
Transportation and storage also added 47,000, and health care increased by 39,000.
This blow to the job market comes even though economic growth appears strong in the fourth quarter. The Atlanta Federation’s GDPNow tracker sees the US economy accelerating by 8.5% in the last three months of the year, although economists expect the first quarter of 2021 to have little or no growth.
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