The 140,000 drop in total non-farm employment clearly shows that the pandemic is back at the center of the action. The number of employees in the private sector fell by 95,000 – the service sector in particular was hit hard again with a decline of 188,000 jobs. While this is not comparable to the development in early 2020, it clearly reminds us that the crisis is far from over.
The loss of jobs, however, was unevenly distributed. The leisure and hospitality industry was again the epicenter of the tragedy with a loss of 498,000 jobs, while business services (+161,000), trade and transport (+191,000) and, surprisingly, retail (+121,000) even managed to increase employment. On the positive side, the goods manufacturing industry created a further 93,000 jobs. Indeed, these numbers could tell the story of an economy beginning to adapt to the pandemic. This optimistic assessment finds some support when looking at the survey-based labor market data. Total employment remained fairly stable at around 149 million people, and unemployment hardly changed either: the unemployment rate remains at 6.7%. The flip side of the coin is that many people seem to continue to remain outside of the working population – whether because they are discouraged or simply unable to find a job. Accordingly, the participation rate remained at a low level of 61.5%, compared to just over 63% before the crisis.
Our positive assessment of the latest labor market data is still overshadowed by the high sensitivity of the service-oriented economy to an exogenous shock called Covid-19. In the short term, the US labor market outlook remains far from optimistic. We expect the pandemic to continue to dampen employment. Given the possible seasonality of the pandemic, not to mention advances in vaccinations, there is at least a light at the end of the tunnel – sometime during the summer months of this year. Until then, hopes for further fiscal aid will certainly remain high, and the US Federal Reserve will most likely do everything it can to continue to support the recovery.
Author: Christian Scherrmann, USA economist
Live stream on December 14, 2020 from 6 p.m .:
With Hans-Werner Sinn, Former President of the Ifo Institute: Corona and the miraculous increase in money in Europe
– Here is the stream! –