We expect the December U.S. employment report to reflect the strains across the real economy associated with the pandemic, which intensified during the final month of the year. We now anticipate a decline of 75,000 jobs in total U.S. employment and an increase in the unemployment rate to 6.8% when the report is released Friday.
We anticipate a decline of 75,000 jobs in total U.S. employment when the report is released Friday.
Average hourly earnings and aggregate hours worked both should increase 0.2% on the month. Despite the arrival of a vaccine in late last year, those good tidings will not provide a tailwind to private-sector employment until later this spring.
One would normally anticipate a significant increase in temporary help and retail trade during the holiday season, but this year that most likely did not happen, as suggested by the decline of 35,000 jobs in retail trade employment in November.
Partial shutdowns across the economy in December are likely to impede hiring in leisure and hospitality, business services as well as trade and transport.
More important, the fiscal challenges faced by state and local governments will be on prominent display in the December payroll report. Over the past three months, total government employment has declined by 585,000 and is down by 1.31 million since February 2020.
For some time, we have made the case that state and local governments would begin to shed labor to balance budgets if there was no further fiscal aid from the federal government. In our estimation, we have reached that point and we expect this to be one of the primary narratives around which the policy debate on further fiscal aid will revolve ahead of the benefits cliff approaching in March.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
