US economy sheds jobs in December for the first time since April

US nonfarm payrolls plunged in December, falling for the first time in eight months, signaling that the economy, hit by surging coronavirus infections, is losing momentum that could temporarily stall the recovery from the pandemic.

US payrolls fell by 140,000 in December after increasing by 336,000 in November and missing forecast for 77,000 jobs, darkening the outlook for labor sector which recovered around a half of 22.2 million jobs lost during the pandemic

Strong fall in employment was concentrated in the services sector, with leisure and hospitality sector registering the biggest damage and accounting for three quarters of job losses, as 498,000 jobs were lost in leisure and hospitality sector.

Weak payrolls joined a raft of other soft figures in consumer confidence and spending that add to strong negative impact of the coronavirus pandemic to the economy.

The unemployment rate remained unchanged at 6.7% in December against forecast for increase to 6.8% but remains biased down by people misclassifying themselves as ’employed but absent from work’ and without this misclassification the jobless rate would have been about 7.3%.

On the other side, manufacturing, construction, and retail sectors performed better and partially offset negative impact, suggesting that the economy may not fall back into recession, as nearly $900 billion in additional pandemic fiscal aid would provide relief.

After Democrats have gained effective control of the US Senate, more stimulus could be expected in coming months that brightens the outlook.