U.S. Employment Dips In December As COVID-19 Headwinds Halt Labor Market Recovery
U.S. employment ticked down in December, with the Bureau of Labor Statistics (BLS) reporting a decline of 140,000 jobs, the first decrease since April 2020. Similarly, after seven consecutive monthly increases, December’s Conference Board Employment Trends Index (ETI) stood at 99.01, a negligible decrease from November’s 99.05. The index is currently down 9.2 percent from a year ago.
"The latest Employment Trends Index numbers signal that the labor market recovery has paused, and in the coming months, employment will likely remain stagnant or even dip," says Gad Levanon, head of The Conference Board Labor Markets Institute. "As the number of COVID-19 cases continues to rise and downside risks grow, it appears unlikely that the labor market will resume its recovery over the next few months. We expect in-person services such as restaurants, hotels, entertainment, passenger transportation, and personal and childcare services to take the biggest employment hit. The number of jobs in most other industries should continue to grow."
The Conference Board’s ETI aggregates eight labor market indicators, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly. December’s decrease was driven by negative contributions from three of the eight components.
Speaking on the BLS report, Levanon says, “The drop in employment is primarily due to three factors: 1) deteriorating consumer demand for in-person services because of the acceleration in the spread of the virus; 2) the growing stringency of state and local governments’ pandemic-related policies; and 3) consumers’ growing fears over getting infected. Consumer spending was already down in November, partly driven by lower spending on restaurants and hotels. Overall, the drop in employment in in-person services could more than offset the increase in other industries, and lead to a decline in the number of jobs in the U.S. in January to February. The unemployment rate should slightly increase during that period.”