Surging Covid-19 infections drove nearly half a million job losses in the US leisure and hospitality sector. ©AFP/File VALERIE MACON 

Washington (AFP) – The United States lost 140,000 jobs in December as the worsening coronavirus pandemic undermined the economy’s recovery and caused the first loss in employment since April.

The downbeat report released by the Labor Department on Friday came after months of steady gains in hiring were brought to a halt by the recent surge in infections, which saw the one-day death toll reach 4,000 as states scrambled to reimpose restrictions on businesses to again bring the virus under control.

“The decline in payroll employment reflects the recent increase in coronavirus (Covid-19) cases and efforts to contain the pandemic,” the report said.

Particularly hard hit was the leisure and hospitality sector, which lost 498,000 jobs in December, according to the government.

The result was far worse than the modest gain economists forecast, but some analysts had warned the decline was coming.

“The current COVID-19 wave has stopped the recovery in its tracks,” Navy Federal Credit Union economist Robert Frick said.

Until the pandemic is under control and vaccine rollout speeds up, “people will not be rushing back to bars and restaurants any time soon,” he said.

While the unemployment rate held steady at 6.7 percent, 10.7 million people remain unemployed — both figures about double the pre-pandemic levels.

Black workers have a far higher jobless rate at 9.9 percent, while the rate for Hispanic workers is 9.3 percent, according to the data.

– ‘Chilled, but not frozen’ –

The job losses were also exacerbated by the failure of Congress to approve a new relief package before several business and worker aid programs lapsed, including the Paycheck Protection Program (PPP) that offers grants for companies to pay employees.

Lawmakers finally agreed on a $900 billion stimulus measure in late December, which provides a lifeline to some struggling firms.

“Stimulus provides hope that we’ll be back on the plus side soon, but it may take a month or two before that happens,” Frick said.

Gregory Daco of Oxford Economics describe the labor market as “chilled but not frozen.”

“The worsening health situation and the fact that herd immunity is still months away mean that jobs growth will be tepid in the immediate months ahead,” he said in an analysis.

President-elect Joe Biden is set to take office on January 20, and with his Democratic party in control of both houses of Congress following victories this week in two runoff elections in Georgia, he may push through another economic relief package.

But Austan Goolsbee, former chair of the White House Council of Economic Advisers, warned on CNBC that the “awful” jobs numbers highlight the risk of a “double dip recession.”

The job losses in leisure and hospitality and in private education were partially offset by gains in professional and business services, retail trade and construction, the report said.

The job gains registered in November were also revised up to 336,000, about 90,000 more than originally reported.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.