Data released on Friday showed the first negative reading in non-farm payrolls since April. Analysts at Wells Fargo noted that nearly half a million jobs were lost in the leisure and hospitality sector in December. On a positive perspective, they added that outside high-contact services, employment is holding up better.
Key Quotes:
“Restrictions and voluntary efforts to curtail the spread of COVID took a clear toll on the labor market in December. Nonfarm payrolls declined by 140K in December, the first contraction since April. The drop corroborates the deteriorating jobs picture offered by the recent upward trend in jobless claims, the sub-50 reading from the ISM services employment index and the drop in small business hiring plans.”
“Despite the renewed decline in payrolls, we still see scope for a faster recovery in jobs when compared to recent downturns. Savings are burning a hole in many people’s pockets after having to avoid travel, in-person dining and entertainment for nearly a year. With the means and eagerness to get back to “normal”, hiring could ramp up quickly once COVID cases are more under control. That could be particularly true in the hard-hit leisure & hospitality industry, which accounts for 40% of the 9.8M net job losses since February and can hire quickly given that workers need few specialized skills.”
“The latest round of COVID relief also is poised to help speed the labor market’s recovery with $285B in additional PPP loans and targeted emergency grants helping small businesses retain more employees. Nevertheless, the next few months are likely to be remain bleak in the jobs market as the pandemic continues to rage.”
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