Total nonfarm payroll employment fell by 140,000 in December, while the unemployment rate stood unchanged at 6.7%, according to the U.S. Bureau of Labor Statistics’ monthly employment report.
According to the BLS, this drop in payroll employment—following several months of increases—reflects the recent rise in COVID-19 cases and other efforts to contain the pandemic. The market saw its strongest job losses in leisure, hospitality, and private education, partially offset by gains in retail trade, professional and business services, and construction.
“The December jobs report really just reiterated what we already knew,” says Ali Wolf, chief economist at Zonda. “Businesses in the goods economy, like housing, have actually been adding jobs even as COVID-19 cases and hospitalizations rise. Unfortunately, service-based companies are getting hit with the double whammy of consumers exercising caution about going out and some local government shutdowns.”
Both the unemployment rate and the number of unemployed persons—10.7 million—remained unchanged from the prior month. Both numbers are far lower than they were in April, but stand at nearly twice their pre-pandemic levels in February 2020 (3.5% and 5.7 million). The unemployment rate for teenagers (16%) and Hispanics (9.3%) rose in December, while jobless rates for adult men, adult women, whites, Blacks, and Asians showed little change.
The number of persons on temporary layoff rose by 277,000 in December, up to a total of 3 million. This stands far lower than the 18 million persons on temporary layoff in April, but higher than 700,000 in February. The number of permanent job losers fell by 348,000, down to 3.4 million in December. The number of unemployed reentrants increased by 282,000 to 2.3 million.
According to the Household Survey Supplemental Data, 23.7% of employed persons teleworked as a direct result of the COVID-19 pandemic, up from 21.8% in November. At the same time, 15.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic—up by 1 million from November. Of that number, 12.8% reported some pay for hours not worked. Among those not in the labor force, 4.6 million were prevented from looking for work due to the pandemic, up from 3.9 million in November.
Employment in leisure and hospitality fell by 498,000 in December; overall employment in this sector is down by 3.9 million, or 23.2%, since February. Employment in professional and business services rose by 161,000, while retail trade added 121,000 jobs and construction added 51,000 jobs. Employment in the construction industry is still 226,000 jobs below its February level.
“This month’s jobs report was great news for a housing market in desperate need of more supply. However, we’ll be keeping an eye on the ongoing supply-demand imbalance resulting from years of under building,” says First American deputy chief economist Odeta Kushi. “Residential construction jobs increased nearly 1.1% in December relative to November and are now 0.8% above their pre-pandemic levels in February. Increasing the number of construction workers is critically important to alleviating the labor shortage challenge and the gap between household formation and home building. More hammers, more homes.”
