US economy loses jobs as virus pummels restaurants

The US economy shed jobs for the first time in eight months in December as the country buckled under an onslaught of Covid-19 infections, suggesting a significant loss of momentum that could temporarily stall the recovery from the pandemic.

The plunge in non-farm payrolls reported by the Labour Department on Friday was concentrated in the leisure and hospitality sector, with closures of restaurants accounting for three-quarters of the job losses.

But with other industries including retail, manufacturing and construction performing better, the economy is unlikely to fall back into recession.

Nearly $900 billion in additional pandemic relief approved by the government in late December will probably provide a backstop. More fiscal stimulus is expected now that Democrats have gained effective control of the US Senate, boosting the prospects for President-elect Joe Biden’s legislative agenda.

There is also optimism the rollout of coronavirus vaccines will be better coordinated under the incoming Biden administration.

The employment report is one of the final scorecards delivered during Trump’s presidency and stands as a reminder of the tumultuous economic crisis that marked his last months in office.

Payrolls decreased by 140,000 last month, the first decline since April, after increasing by 336,000 in November.

The economy has recovered 12.4 million of the 22.2 million jobs lost during the pandemic.

Economists polled by Reuters had forecast 77,000 jobs would be added in December. Covid-19 cases in the United States have jumped to more than 21 million, with the death toll exceeding 357,000 since the pandemic began, according to a Reuters’ analysis.

The leisure and hospitality sector lost 498,000 jobs last month, with employment at restaurants tumbling 372,000.

There were also decreases in private education jobs and government employment. But retail employment rose by 121,000 jobs. Factories hired 38,000 workers and construction payrolls increased by 51,000 jobs.

There were also gains in employment in professional and business services, transportation and warehousing, health care and wholesale trade industries. US stocks opened higher as investors continued to bet on additional government stimulus. The dollar was slightly lower against a basket of currencies.