Private payrolls contract for the first time since May with 123,000 people losing their jobs in December as COVID restrictions kicked in once more
Private companies reduced their workforce in December for the first time in six months, as the predicted winter surge in coronavirus cases caused serious harm to the U.S. economy.
Companies reduced their payroll by 123,000 people from November to December, according to ADP's latest National Employment Report, published on Wednesday.
The news came as a surprise: economists surveyed by Dow Jones had been expecting growth of 60,000.
The hardest-hit sector was leisure and hospitality, where 58,000 people lost their jobs.
Almost all the layoffs for the month came from companies that employ more than 1,000 workers, as hotel and restaurant chains cut back on staff.
The number of those employed by private companies fell by 123,000 in December
Firms in that category slashed 169,000 employees, while small businesses with fewer than 20 workers, also a component of the bar and restaurant industry, reduced head count by 16,000.
Franchises saw a loss of 5,300 positions and more cuts are likely to come, as Disney and Marriott in December announced large reductions.
The second hardest-hit sector was trade, transportation and utilities, where 50,000 jobs disappeared.
The third most affected area was manufacturing, where 21,000 people were let go.
Many turned to food banks as job losses hit and families were struggling to feed themselves
People are seen lining up outside a food pantry in Brooklyn in November to receive free food
The last time the number of people employed by private companies decreased was in May, when 2.76 million lost their jobs.
April bore the brunt of the job losses, with 20.24 million finding themselves unemployed.
Companies have recovered 9.9 million since April, according to ADP estimates that sometimes have differed widely from the official Labor Department nonfarm monthly payrolls tally.
Since May the numbers have been steadily rising: an increase of 2.37 million in June; up 167,000 in July; and up 428,000 in August.
The December decrease comes as COVID-19 cases spiked, and lockdowns were implemented. In the two biggest cities in the U.S. - New York City and Los Angeles - indoor dining closed once again; people were told not to travel for the holidays; businesses went under.
Not all industries contracted.
Professional and business services added 12,000 people; education and health services increased by 8,000; and the numbers working in construction rose by 3,000.
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