Economy sees job loss in December for the first time since April as surging virus takes toll

Job creation came to a halt in December as restrictions brought on by surging Covid-19 cases hammered virus-sensitive industries, particularly bars and restaurants, which lost nearly half a million positions for the month.

The Labor Department reported Friday that nonfarm payrolls fell by 140,000. That was below expectations for 50,000 from economists surveyed by Dow Jones.

The unemployment rate was 6.7%, compared to the 6.8% estimate. An alternative unemployment measures that includes discouraged workers and those holding part-time jobs for economic reasons declined to 11.7% from 12%.

Since a recovery that began in May, the economy had recovered 12.3 million of the jobs lost. The biggest hit came in the hospitality industry, where hotels, restaurants and bars suffered under the yoke of restrictions that limited travel, dining and drinking.

As an extraordinary year came to a close that saw about 22 million workers furloughed in March and April, the jobs market had been staging a sharp recovery that nonetheless still left about half those displaced on the sidelines.

The industry saw a plunge of 498,000 positions for the month, with most coming in restaurants and bars, which saw a drop of 372,000. Overall, hospitality is down 3.9 million jobs since January, a 23.2% drop, the Bureau of Labor Statistics report showed.

The summer saw many of the restrictions on the establishments limits lifted, but they were reimposed over the past few months as coronavirus cases rose and states and communities again eliminated or restricted indoor dining and drinking.

Private education also a saw a drop of 63,000, while government jobs contracted again with the loss of 45,000 positions. The other services category was down 22,000.

Professional and business services saw growth of 161,000 while retail added 121,000 during the holiday shopping season and construction contributed 51,000.

Transportation and warehousing also added 47,000 and health care grew by 39,000.

That hit to the jobs market comes even though economic growth otherwise looks solid in the fourth quarter. The Atlanta Fed’s GDPNow tracker sees the U.S. economy accelerating 8.5% for the final three months of the year, though economists expect the first quarter in 2021 to show either little or no growth.

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