Our forecast shows payroll employment for December increasing by about 100,000 jobs, which is not statistically much different than zero. It compares to a tepid 245,000 gain in nonfarm payrolls in November. Regular unemployment insurance (UI) claims were down more than 150,000 during the survey weeks for November and December; the drop is greater if special pandemic claims are included. However, a good portion of the rise in claims for special pandemic UI benefits includes people who had run out of extensions on their existing UI benefits, not newly unemployed workers.
Private sector payrolls are likely to increase by 130,000, while public sector payrolls shrink by about 30,000 in December. Another 3,400 temporary hires for the 2020 Census rolled off federal government payrolls; retirements and cuts at the state and local levels continued. The ranks of postal workers is also expected to fall. There was funding for the U.S. Postal Service and for states to help with education, vaccinations, testing and tracking in the new aid package but those funds will take time to be deployed and only fill a portion of the widening gap in state and local budgets.
Layoff announcements in December were largest at the airlines because federal bailouts for the industry lapsed in November. The good news is that the relief bill finally passed and was signed in late December. Many of those workers will be paid even if they are not actually working in January.
Disney initiated a major round of layoffs that will show up in the December employment report. Those jobs will not come back as fast given the surge in COVID cases in California, which has forced the state to adopt more aggressive containment measures. Hospitals there are overwhelmed and forced to ration care in the worst affected cities.
New hires to fulfill online shipments will not offset the shortfall in the usual seasonal hires in everything from retail to restaurants and entertainment. Small businesses were hit particularly hard as Payroll Protection Plan (PPP) loans, which helped many businesses stay afloat, ran out in November. Another, smaller tranche of loans has been approved in the new aid bill.
We expect to see the number of professional hires eke out a small positive, mostly from temporary jobs. This reflects a general caution about the timeline for herd immunity, which suffered another blow with a slow start to inoculations in December. Botched coordination between the federal government, vaccine producers and the states meant that only about 2 million of the 20 million vaccinations planned by year-end actually occurred. Uptake is also a challenge among some frontline workers.
Manufacturing and residential construction are expected to have generated solid job gains for December. Residential construction remains on a tear. Containment measures spared manufacturers both at home and abroad during this wave. Manufacturers have been better able to contain infections with PPE and social distancing efforts than other types of businesses; the exceptions have been meat and poultry processors.
Separately, we see the unemployment rate edging up slightly to 6.9% for December, as workers who recently lost extensions to benefits attempt to look for work again. The problem is finding jobs in an economy that is slowing while still down nearly 10 million jobs since the peak in February.
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