Private sector employment dropped by 123,000 jobs from November to December, according to the monthly labor market analysis released Wednesday by payroll firm ADP.
The number was below consensus forecasts of 50,000 jobs added and compares to 307,000 jobs added in the prior month.
Losses were heaviest among large employers, those with more than 1,000 employees, which lost 147,000 jobs. The services sector accounted for some of the largest losses.
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“As the impact of the pandemic on the labor market intensifies, December posted the first decline since April 2020,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The job losses were primarily concentrated in retail and leisure and hospitality.”
The ADP report is in line with others that have shown a weakening job market amid concerns about the continuing pace of new coronavirus cases and political uncertainty in Washington. It often foreshadows the closely watched monthly jobs report issued by the Labor Department, which is due out Friday morning.
Economists are looking for the Labor Department report to show about 50,000 new jobs were added in December, but some have forecast a modest drop in new jobs created.
“A bumpy ride remains for at least the next few months before the economy reopens,” Bankrate’s senior economic analyst Mark Hamrick said ahead of the report on Tuesday. “The most recent Bankrate survey of economists looks for the unemployment rate to improve only to 6{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} by year-end. When asked about risks to the economy over the next 12-18 months, most said risks are titled to the upside. That suggests there’s a good chance the performance of the economy could yield a pleasant surprise.”
Indeed, various economists have recently raised their forecasts for the economy in 2021. This reflects the recent rollout of COVID-19 vaccines, continued low interest rates and the recent passage of a $900 billion coronavirus relief package from Congress.
