WASHINGTON (Reuters) – U.S. private companies laid off workers in December for the first time in eight months as out-of-control COVID-19 infections triggered a new wave of business restrictions, setting the tone for what will likely be a brutal winter the economy.
The ADP’s national employment report on Wednesday showed job losses in all industries last month as the coronavirus outbreak kept many consumers and workers at home. Although the report highlighted the magnitude of the crisis, the economy is unlikely to fall back into recession, thanks to the additional fiscal stimulus approved in late December.
The ADP report added to falling consumer spending and persistent layoffs by suggesting that the economy lost significant momentum in late 2020. The minutes of the December 15-16 meeting of the Federal Reserve published on Wednesday showed that policymakers hoped that the cases to be fired would be particularly difficult for the labor market in the coming months.
“The machine of large U.S. jobs was met with a growing wall of coronavirus cases and state blockages that jeopardizes the entire economic recovery from the recession,” Chris Rupkey, chief economist at the MUFG, told New York. “The focus of every recession is job loss and right now the fall in jobs at the end of the year hints that the dark days of the job market have returned last spring.”
Private payrolls fell by 123,000 jobs last month, the first decline since April, after rising 304,000 in November. Economists surveyed by Reuters had predicted that private payrolls would rise by 88,000 in December.
The ADP report is developed in conjunction with Moody’s Analytics. Although it has an irregular record that predicts the counting of private government payrolls due to methodological differences, it still monitors the tracks on the health of the labor market.
(GRAPHIC: ADP -)
COVID-19 cases in the United States have risen to more than 20 million, with more than 352,000 deaths since the virus emerged in China in late 2019, according to the U.S. Centers for Disease Control and Prevention. Units.
In addition to the virus, the labor market has been constrained by government delays in providing another package of aid to businesses and the unemployed.
More than $ 3 trillion in tax incentives helped companies hire workers and keep other people on payroll. It also helped millions of unemployed and underemployed Americans pay bills and keep spending down, leading to record economic growth in the third quarter. At the end of December, about $ 900 billion in additional money was approved for the government bailout.
“While the economy is about to shrink, I don’t think it will,” Moody’s Analytics chief economist Mark Zandi told reporters. “The additional $ 900 billion will help ensure that the economy does not back down into recession.”
There is likely to be more fiscal stimulus. Democrats won a Senate race in Georgia and led another Wednesday, approaching a sweeping surprise at a former Republican stronghold that would give them control of Congress and greater power to advance the president’s agenda. elect Joe Biden.
Wall Street stocks rose, with the Dow and S&P 500 hitting record highs as investors opted for more stimulus and infrastructure spending from a Democratic-led Congress. The dollar won against a basket of currencies. U.S. Treasury prices fell.
WIDE WEAKNESS
The manufacturing industry laid off 21,000 jobs in December, while the payroll of the private services industry fell by 105,000. There were 13,000 job losses among small businesses. The payrolls of large companies fell by 147,000. Medium-sized colleagues hired 37,000 workers last month.
The ADP report was released before Friday a comprehensive and comprehensive monthly government report. According to a Reuters poll of economists, private non-farm payrolls probably rose by 98,000 jobs in December after rising by 344,000 in November.
With government payrolls forecast to fall again last month, general non-farm payrolls are expected to rise by 71,000 jobs after rising by 245,000 in November. This would mean the smallest gain since job recovery began in May and meant the economy recovered about 12.5 million from the 22.2 million jobs lost in March and April.
Economists predict that it could take a while to recover all the lost jobs, even with additional tax support and the herd’s immunity to the virus from the vaccines that are being rolled out. The decline in private payrolls in the ADP supports the expectations of several economists that the economy will launch jobs in December, although these terrible predictions have been countered by a survey on Tuesday that showed employment in the economy. factories bouncing in December.
Other economists said this championed employment growth last month, albeit at a significantly slower pace than in November.
Economic growth estimates for the fourth quarter are around 5.0% annualized. The economy grew at a historic rate of 33.4% in the third quarter after shrinking at a rate of 31.4% during the period April to June, the deepest since the government began keep records in 1947.
Report by Lucia Mutikani; Edited by Andrea Ricci