Total nonfarm employment in America declined by 140K payrolls in December, according to a report out this morning from the Bureau of Labor Statistics. That was well below the consensus forecast but the October and November figures were revised higher by a net 44K payrolls. Altogether this means that roughly 56 percent of the 22 million jobs lost during March and April were able to be recovered by year-end 2020, and therefore there is clearly still a lot of ground left to make up in the employment recovery. More granular data released by ADP this week confirmed that the pace of the labor market recovery continued to weaken in December, but also that the job losses were concentrated at the tails in terms of establishment size. Specifically, midsize businesses were responsible for all the job growth last month while payrolls fell by 16K for employers with 1-19 workers, and 147K for companies with at least 500 employees. The decline at the smallest of businesses is likely a direct result of the continued reinstatement of various activity restrictions across the country in December as the winter wave of the pandemic continued to gain momentum.
As for the weakness at large businesses, the latest uptick in COVID cases likely exacerbated the separations figure but a continuation of earlier trends might have been a factor as well. Moreover, a separate report from Challenger, Gray & Christmas showed that corporate layoffs totaled 77,030 in December, up 18.9 percent from an already elevated November print and 134.5 percent above the December 2019 reading. As for the full-year total, 2,304,755 job cuts were announced in 2020, a 289.0 percent jump from 2019 and 17.8 percent above the previous all-time high recorded in 2001. On the bright side the trend appears to be stabilizing as the final three months of 2020 saw 222,493 corporate layoffs, down 55.3 percent from Q3 and the smallest quarterly total of the year. The majority of job cuts in 2020 occurred in the entertainment and leisure sector (866,046), followed by transportation (199,599), which includes airlines, and retail (184,886). This is not too surprising since these arenas have been and remain the most directly hurt by lockdowns and other lingering activity restrictions, and these businesses are therefore the most likely to benefit from a successful vaccine rollout. However, it is worth noting that the rebound in retail employment could be slower than in the other arenas because this sector actually led all other industries for job cuts in 2017, 2018, and 2019. This is a reflection of the growing competition many brick-and-mortar retailers were already facing from online merchants (Amazon), which have largely flourished during the lockdowns. Other industries that appear to have weathered the pandemic’s economic distortions relatively well include chemicals, financials, pharmaceuticals, and utilities, all of which managed to report fewer layoffs in 2020 than in 2019.
Sources: Econoday, U.S. DoL, ADP, CG&C, FRBSL