Jobs Market Suffers a Relapse

 Jobs Market Suffers a Relapse

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The Labor Department reports U.S. payrolls fell by a seasonally adjusted 140,000 in December from a month earlier.

The Labor Department reports U.S. payrolls fell by a seasonally adjusted 140,000 in December from a month earlier.

Photo: Nam Y. Huh/Associated Press

America shed jobs last month, and the danger is that the labor market is going to get worse before it gets better.

The Labor Department on Friday reported that U.S. payrolls fell by a seasonally adjusted 140,000 in December from a month earlier. Though mitigated by an upward revision to November’s jobs figure, that was substantially worse than the gain of 50,000 jobs economists expected to see.

The culprit was clearly the resurgence in Covid-19 cases that began in the fall. The leisure and hospitality sector, which includes restaurants and hotels, lost 498,000 jobs. State and local government employment fell by 51,000—an indication of how the budget strains the pandemic has brought are leading to cuts. Those losses were partially offset by gains in areas such as manufacturing, which is riding a surge in demand for goods over services, and construction, which has been buoyed by a boom in housing.

This month could bring more pain, with Americans becoming more skittish about gathering and authorities continuing to reimpose restrictions. In the week that included the pay period the Labor Department’s jobs survey is based upon, there were 1.49 million newly reported Covid cases and 16,673 deaths, according to Johns Hopkins University, versus 1 million cases and 7,608 deaths during the same week in October.

Over the seven days ended Thursday, there were 1.6 million new cases and 19,349 deaths, and there is a risk that the wave has yet to crest. Worries about the new, highly contagious strain of coronavirus that first emerged in the U.K., and has since spread through the world, could lead to more stringent mitigation efforts.

The worsening job market could provide a bit more urgency for Congress to quickly put together another Covid relief package after President-elect
Joe Biden

is sworn in on Jan. 20, and for it to include increased funding for vaccine distribution. Those measures could provide a sturdier bridge for the unemployed to make through the winter, while helping the vaccine rollout proceed more smoothly. With services spending likely to rebound quickly once the danger for Covid has diminished, many of those who have lost their jobs might be able to find work again

For now, though, the virus is in control.

From the Archives

The U.S. unemployment rate shot up faster than in any other developed country during the pandemic. WSJ explains how differences in government aid and labor-market structures can help predict how and where jobs might recover. Video/Illustration: Jaden Urbi/WSJ (Originally published Sept. 4, 2020)

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Write to Justin Lahart at justin.lahart@wsj.com