The US economy shed jobs for the first time in eight months in December as the country buckled under an onslaught of Covid-19 infections, suggesting a significant loss of momentum that could temporarily stall the recovery from the pandemic.
The plunge in non-farm payrolls reported by the labour department on Friday was mainly in the leisure and hospitality sector, with closures of bars and restaurants accounting for three-quarters of the job losses.
But with other industries including retail and manufacturing performing better, the economy is unlikely to fall back into recession. Nearly $900bn (about R13.8-trillion) in additional pandemic relief approved by the US government in late December will probably provide a backstop.
More fiscal stimulus is expected now that Democrats have gained effective control of the US Senate, boosting the prospects for President-elect Joe Biden's legislative agenda. There is also optimism that the rollout of vaccines will be better co-ordinated under the incoming Biden administration.
Congress this week formally certified Biden's victory in the November 3 election, hours after hundreds of President Donald Trump's supporters stormed the US Capitol.
The employment report is one of the final scorecards delivered during Trump's presidency and stands as a reminder of the tumultuous economic crisis that marked his last months in office.
Payrolls decreased by 140,000 jobs last month, the first decline since April, after increasing by 336,000 in November.
The economy has recovered 12.4-million of the 22.2-million jobs lost during the pandemic. Economists had forecast 77,000 jobs would be added in December.
The leisure and hospitality sector lost 498,000 jobs last month, with employment at bars and restaurants tumbling 372,000. But retail employment rose by 121,000 jobs. Factories hired 38,000 workers.
US stocks opened higher as investors continued to bet on additional government stimulus.
Weak payrolls joined a raft of other soft data on consumer confidence and spending in underscoring the brutal impact of the pandemic on the economy, which sank into recession in February.
The unemployment rate was unchanged at 6.7% in December. It was, however, biased down by people misclassifying themselves as being "employed but absent from work".
Without this misclassification, the jobless rate would have been about 7.3%.
The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 61.5%. About 15.8-million people reported they were unable to work because of business closures or failures related to the pandemic, up from 14.8-million in November.
Reuters
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