WASHINGTON (NewsNation Now) — U.S. employers cut 140,000 jobs in December, marking the first decline in eight months, according to the Bureau of Labor Statistics.
The agency reported the cuts Friday in its latest monthly report on the country’s employment situation, suggesting a significant loss of momentum that could temporarily stall economic recovery from the pandemic.
Nonfarm payrolls decreased by 140,000 jobs last month, the Labor Department said on Friday. Data for November was revised up to show 336,000 jobs added instead of 245,000 as previously reported. That was the first decline in payrolls since April.
The economy has recovered just over half of the 22.2 million jobs lost in March and April.
Meanwhile, the unemployment rate stayed at 6.7%, the first time it hasn’t fallen since April.
Friday’s figures from the Labor Department suggest that employers have rehired roughly all the workers they can afford to after having laid off more than 22 million in the spring — the worst such loss on record. With consumer spending barely growing over the past few months, most companies have little incentive to hire. The economy still has 9.9 million fewer jobs than it did before the pandemic sent it sinking into a deep recession nearly a year ago.
“There’s not much comfort to be taken from the stable unemployment rate, given that millions of Americans have left the labor force with nearly 11 million listed as officially out of work,” said Mark Hamrick, Bankrate‘s senior economic analyst.
The pandemic will likely continue to weaken the economy through the winter and perhaps early spring. But many economists, along with the Federal Reserve’s policymakers, say they think that once the coronavirus vaccines are more widely distributed, a broad recovery should take hold in the second half of the year. The incoming Biden administration, along with a now fully Democratic-controlled House and Senate, is also expected to push rescue aid and spending measures that could accelerate growth.
“The economy will be on the soft side for the next several months, but with fiscal support and vaccines, the economy should kick into higher gear by summer,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.
For now, the renewed increase in virus cases, as well as cold weather, has caused millions of consumers to avoid eating out, shopping and traveling. Re-imposed business restrictions have shut down numerous restaurants, bars and other venues.
Economists at TD Securities estimate that more than half the states have restricted gatherings to 10 or fewer people, up from about a quarter in September. New York City and California, among others, placed strict new limits on restaurants last month.
The economy is believed to have expanded at around a 5% annualized rate in the fourth quarter, with the bulk of the rise in gross domestic product seen coming from inventory investment. It grew at a historic 33.4% pace in the third quarter after shrinking at a 31.4% rate in the April-June period, the deepest since the government started keeping records in 1947.
The Associated Press contributed to this report.