Jobs Report and the Monthly Employment Growth Statistics
Why 140,000 Jobs Were Lost in December
The U.S. economy lost 140,000 jobs in December. The job losses reflect the increase in COVID-19 cases. Several states have required businesses to close or limit hours to slow the pandemic.
December is the first month of job losses since April, when the economy lost a record 20.5 million jobs when businesses shut down to slow the spread of the COVID-19 pandemic.
As of December, there were 4.9 million more unemployed people than in February 2020, the month before the pandemic. The big swings in job losses and job gains in 2020 reveal the tremendous impact the pandemic has had on the U.S. economy.
As the chart below shows, job gains have decreased significantly since June 2020 and finally reversed in December.
Where Jobs Were Added
Professional and business service jobs increased by 161,000, with temporary help services adding 67,600 jobs. Companies add temporary workers when they aren't sure they will need permanent positions. That's especially true during the early stages of recovery.
Wholesale added 25,100 jobs, compared to 11,800 jobs in November. Transportation and warehousing added 46,600 jobs.
The pandemic further damaged an already weakened retail sector. Store managers have been slashing jobs since March 2017. Online sales have cut into brick-and-mortar store sales. That's been especially true during shelter-in-place.
Other industries saw growth in December:
- Construction added 51,000 jobs in December, compared to 29,000 jobs in November.
- Health care and social assistance added 32,000 jobs in December, compared to 48,500 in November.
- Manufacturing added 38,000 positions after adding 35,000 jobs in November.
- Durable goods added 25,000 jobs after gaining 25,000 in November.
- Retail added 120,500 jobs after losing 21,200 in November.
Financial activities added 12,000 jobs. Banks continued to function during the pandemic but limited the number of people in branch offices. Even before the pandemic, banks had been adding fewer positions as the Fed lowered interest rates. Lower rates reduce profitability to lenders because they must charge less for loans.
The mining industry, which includes the oil industry, added 4,000 jobs. Future oil prices are expected to remain subdued due to reduced demand.
Where Jobs Were Lost
The leisure and hospitality lost 498,000 jobs in December. This is after losing more than 5.7 million jobs between March 15 and April 18. The sector typically added 5,000 to 40,000 jobs before the pandemic. Employment in this industry is down by 3.9 million since February.
Education and health services lost 31,000 jobs. Government employment is also down by 45,000 jobs in December.
The information sector lost 1,000 jobs in December after gaining 2,000 in November. This sector, especially Silicon Valley, is critical to American global competitiveness.
The U.S. Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment report, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics often show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM, and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the Wednesday before the BLS report.
The ADP report gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96% correlated with the revised BLS jobs report.
The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before.
The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.