US job numbers fall unexpectedly for the first time in eight months

·3-min read

US employers shed jobs last month for the first time since April, a sign that the economy is struggling under the weight of the coronavirus pandemic.

The world's biggest economy saw nonfarm payrolls decrease by 140,000 jobs in December, meaning the US has recovered just over half of the 22.2 million jobs that were lost in March and April.

The unemployment rate stayed at 6.7%, the first time since April that it has not fallen.

US President Donald Trump came to the White House promising to create 25 million jobs during his four-year term.

Before the pandemic, unemployment sat at around 3.5% and his promise looked vaguely possible.

But the Labor Department's figures show there are now three million fewer jobs than when Mr Trump came to office and he has instead become the first president since Herbert Hoover during the Great Depression to preside over a net loss of jobs.

Consumer spending is barely moving, with millions of people avoiding eating out, shopping, and travelling, while restrictions in some states have kept businesses such as pubs and restaurants closed.

JPMorgan Chase published debit and credit card data based on 30 million accounts showing that spending was 6% lower in December compared with a year ago.

OpenTable said seated dining is down 60% this week compared to the same week a year ago, worse than two months earlier when the figure was about 35% down compared with the previous year.

However, many economists say there is hope that the more widespread distribution of coronavirus vaccines will inspire a recovery, possibly in the second half of the year.

More spending is expected after Joe Biden takes over as US president later this month, and this could also encourage growth. More aggressive action to get the virus pandemic under control is also expected.

Congress approved a $900bn financial aid package last month and there could be more now that the Democrats have control over the Senate as well as the House of Representatives.

Neil Birrell, chief investment officer at Premier Miton Investors, said the numbers were "way worse than the expectations for a small positive".

He added: "There will be significantly increased pressure on the Biden administration to step up to plate with a big COVID relief package, with estimates already hitting USD 1trn; that may well not be enough to keep markets happy."

Hinesh Patel, portfolio manager at Quilter Investors, described the jobs report as "alarming to say the least".

He said: "To see such a large negative number is worryingly for the state of the economic recovery, and with cases clearly getting to a point of out of control in America, action is going to need to be taken to slow the spread.

"Biden will face a tricky task of navigating the US economy through this storm and needs to make vaccine rollout his number one priority. Creating employment is not an easy task, so for investors it will be important to continue to search out those companies who can weather the storm and operate in a number of different economic environments."