December jobs report preview: Labor market likely 'crawled over the finish line' in 2020
Job growth in the U.S. likely slowed sharply at the end of the year as the unemployment rate ticked up, as the pandemic that rocked the economy over the past year dealt yet another blow to the labor market.
The Labor Department is set to release its December jobs report Friday morning at 8:30 a.m. ET. Here were the main results expected from the report, compared to consensus estimates compiled by Bloomberg:
Change in non-farm payrolls: +50,000 expected vs. +245,000 in November
Unemployment rate: 6.8% expected vs. 6.7% in November
Average hourly earnings, month-over-month: 0.2% vs. 0.3% in November
Average hourly earnings, year-over-year: 4.5% vs. 4.4% in November
Consensus economists expect to see a further deceleration in payrolls growth in December and a tick higher in the jobless rate, with employment trends weakening as new virus-related restrictions dampened employment and businesses awaited support from Congress’s latest stimulus package.
As has been the case over the course of the pandemic, individual estimates for the report spanned a wide range, and a number of economists expected to see payrolls growth turn negative for the first time since April. Such a result would further widen the employment deficit in the labor market from before the pre-pandemic, with the economy still more than 9.8 million payrolls short of its February levels as of November.
The survey week for the December jobs report took place over the 12th of the month, during a record surge in national coronavirus cases and before lawmakers approved the $900 billion virus-relief package, which extended federal unemployment programs and offered augmented jobless benefits and small-business aid. That week, initial jobless claims surged to a three-month high of nearly 900,000, suggesting a jump in layoffs in the final month of the year.
“The latest employment numbers are likely to show the U.S. labor market crawled over the finish line of 2020 with employment growth slowing considerably,” Nick Bunker, Indeed economic research director, said in an email. “A tepid end to the year shouldn’t be surprising, with economic activity facing two major headwinds: surging coronavirus cases and a slowdown in household income growth. The impact of each of these is hard to decipher in real time, but the new jobs numbers may hint at the answer.”
Service-sector jobs are expected to bear the brunt of the job losses in December, unwinding some of their recent recovery.
“We think the leisure and hospitality sector could be impacted more noticeably by the virus than some other areas, and we look for employment in this grouping to fall by close to 100,000 in December, JPMorgan economist Bruce Kasman said in a recent note. “We also look for a decline in retail employment in December. For the private sector overall, we forecast that employment was basically unchanged between November and December.”
The labor force participation rate is also set to be a closely watched data point in Friday’s report. As of November, 4.1 million fewer Americans were working or looking for a job compared to February. Consensus economists anticipate the labor force participation rate remained at a tepid 61.5% in December from November.
“Health concerns about contracting COVID and the need to quarantine or take care of someone else who is sick has kept millions out of the workforce at any given time since the pandemic, particularly older workers,” Wells Fargo economist Jay Bryson said in a note Tuesday. “Parents juggling remote-learning and daycare closures have also found it difficult to continue working or searching for a job. Nearly 1 million parents with children under the age of 18 were not in the labor force in November specifically because of the pandemic.”
“And of course, a lack of job opportunities—as there are nearly 10 million fewer jobs today than back in February— has also contributed to millions of workers remaining on the sidelines of the labor market,” Bryson said.
This post will be updated with the results of the Labor Department’s non-farm payrolls report Friday at 8:30 a.m. ET. Check back for updates.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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