The U.S. lost jobs in December for the first time in eight months as the recovery from the coronavirus pandemic stalled amid renewed lockdowns that hammered the hospitality industry.
The Labor Department reported Friday that employers cut 140,000 jobs last month, the first decline since April. Economists had expected a drop of 50,000.
The unemployment rate held steady at 6.7%, far below the April peak of 14.8% — a post-World War II high — but still almost twice its pre-pandemic level.
Since a recovery that began in May, the economy had recovered 12.3 million of the jobs lost to the pandemic. “Today’s report showed the economy’s not just tapping on the brakes, but actually has been thrown into reverse,” said Daniel Zhao, senior economist at Glassdoor.
The hospitality industry took the biggest hit last month, with 498,000 positions lost amid restrictions that kept Americans out of hotels, restaurants, and bars. Overall, hospitality is down 3.9 million jobs since January, a 23.2% drop.
But according to The Wall Street Journal, “Economists believe last month’s drop will be temporary and growth will come back quickly with the government aid and as more Americans get the [COVID-19] vaccine.”
“It’s a damaged labor market,” said Gus Faucher, chief economist at the PNC Financial Services Group. “But it is a labor market that is poised for recovery, given the fact that we are seeing the vaccine.”
The December figures capped the worst year of job losses on record. The U.S. economy shed 9.4 million jobs last year, the most in any year since records began in 1939 and nearly double the 5 million lost during 2009, after the housing crash.
Employment in another tourism-related category — amusements, gambling, and recreation — fell by 92,000 last month while government employment declined by 42,000. Those declines offset modest gains in other sectors, such as professional and business services, retail, and construction.
“If we can get the virus under control, the economy has shown there’s a lot of pent-up consumer demand. People want to go out and engage in a variety of activities,” said Patrick Leary, chief market strategist at Incapital.