US private sector unexpectedly sheds jobs in December
By Michele Maatouk
Date: Wednesday 06 Jan 2021
(Sharecast News) - Private sector employment in the US unexpectedly fell in December as the Covid-19 crisis took its toll on the leisure and hospitality sector, according to the latest figures from the ADP.
Employment declined by 123,000 from November, versus expectations for an 88,000 increase and marking the first drop since April. Meanwhile, the November total of jobs added was revised from 307,000 to 304,000.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said: "As the impact of the pandemic on the labour market intensifies, December posted the first decline since April 2020. The job losses were primarily concentrated in retail and leisure and hospitality."
Small business with fewer than 50 employees shed 13,000 jobs, while medium-sized business with between 50 and 499 members of staff added 37,000 jobs. Large businesses with 500 employees or more shed 147,000 jobs.
The survey showed that the goods-producing sector lost 18,000 jobs while the services sector shed 105,000 jobs, with leisure/hospitality suffering the worst decline at 58,000.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the figures were grim but a positive payroll number on Friday is still "a good bet".
"The underlying story here is the impact on the services sector from the patchwork of anti-Covid measures imposed across the country in the fourth quarter, alongside people choosing to reduce their social interactions in the face of soaring infections," he said.
"ADP's initial estimate of monthly private payrolls has been weaker than the official numbers in every month since April, though the errors have diminished. Still, we see good reasons to think that Friday's official payroll number will be better than ADP, and above zero.
"The ADP number is generated by a model which includes lagged official payroll numbers as well as information from firms using ADP's services, so the slowdown in official payrolls in November will have depressed today's December ADP. That doesn't rule out further downward pressure on the official data in December after Covid restrictions tightened further, but we still think it likely that Friday's private sector jobs number will be about +150K."
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