December Jobs Picture Weaker than Expected but Hope on the Horizon

• Author: Mary Singleton
• Posted: 2024-01-02

It was not the jobs report that anyone had wanted to see. After seeing steady gains every month since April, the US economy posted a net loss for jobs in December to end the extremely tumultuous year. Here is what you need to know about the latest numbers and where the economy may find room to grow jobs in the coming months.

December Jobs Report Numbers

According to the US Labor Department, nonfarm payroll employment dropped by 140,000 in the month of December. This reduction was far worse than the 50,000 net loss that the experts had predicted. The good news is that the unemployment rate held steady at 6.7% despite the backslide in job production. Roughly 10.7 million people were unemployed at the end of the year.

Why the Loss of Jobs?

You do not need a degree in economics to understand the underlying reason for the job loss. As COVID-19 cases surged all over the nation, many states tightened restrictions, leading to more than expected job loss. In addition, the onset of winter meant that many states that had been relying on outdoor dining to boost their sales saw massive job losses as patrons retreated indoors.

In addition, there were significant job losses in the travel industry with more people choosing to heed the advice of the health officials and stay home over the holidays. The state of government employment positions also posted a loss, with a reduction of approximately 45,000 posts in state and local municipalities. Total jobs in the government sector are down 1.3 million since the pandemic began in late February.

As the COVID-19 virus forced schools to retreat back to an online model in many areas, the field of education also saw losses not seen since the beginning of the health crisis.

So Where Were the Gains?

Despite the staggering losses in the restaurant, travel, and hospitality industries, the news was not all bad. Helping to offset the losses were new hires in the retail industry and professional sectors.

The technology industry saw meaningful gains with an increase of 20,300 jobs in the computer system design sector. The management and technical consulting industry added another 10,000 jobs. Temporary workers in the tech field enjoyed a substantial increase of over 67,000 new positions.

With the busy holiday shopping season in full swing, it is no surprise that the retail sector saw an impressive amount of job growth. The category of general merchandise stores saw the addition of 59,000 jobs. Somewhat surprisingly, motor vehicle and parts dealers saw a robust gain of approximately 15,000 jobs.

Another winner on the jobs scene in December was the construction industry. With a net gain of 51,000 jobs for the month, the industry is still down when compared to its level when the pandemic first struck. However, some specific markets have gained back all of the jobs that they lost. As expected, residential builders are seeing better job growth than their commercial construction counterparts.

What is on the Horizon?

If this year has taught us anything, it is that it is impossible to predict what the job picture will look like in the coming months. However, economic experts are growing increasingly positive that the outlook will begin to slowly improve. The overriding sense of optimism is resting on the continuing rollout of the COVID-19 vaccine.

In addition, experts are hopeful that the Democratic-controlled White House, Senate, and House of Representatives will result in increasing amounts of stimulus for small businesses. While Congress was able to pass a limited assistance program at the end of the year, it is widely expected that the administration of Joe Biden will pass an even larger stimulus package shortly after he takes office on January 20. It is this financial assistance that will help employers keep their workers on board until the health crisis has abated.

Most economists believe that the first quarter will still be rocky in many sectors. It will not be unexpected to see another net loss of jobs with the January report. However, they are bullish that the job market will continue to rebound in the second quarter.