US non-farm payrolls fell by 140,000 in December vs. an increase of 50,000 expected vs. 245,000 last month.
December’s non-farm reading was the worst since April last year and ended seven straight months of positive growth.
The U.S. unemployment rate was 6.7 percent in December, ending a seven-straight decline.
Why is it so bad?
Leisure and hotel services, which have been hardest hit by the outbreak and are the most visible, shed the most jobs in December.
The leisure and hotel services sector lost 498,000 jobs in December, with restaurants and bars accounting for most of the decline, which was 372,000.
Overall, travel and leisure services have lost 3.9 million jobs since January, or 23.2 percent of the sector’s total, according to the nonfarm report.
In addition, the private education sector lost 63,000 jobs in December, while government employment fell by 45,000.
Professional and business services rose 16.1 jobs, led by the Christmas holiday shopping season, while retail sales added 121,000 jobs and construction added 51,000.
More stimulus on the horizon?
After the release of the non-agricultural data, the US dollar, gold fell, US stock futures, US bond yields continued to move higher. Markets are expecting more economic stimulus in the future, thanks to weaker-than-expected jobs numbers and a unified Democratic Congress.
U.S. stock index futures pared gains after the data release; Dow futures rose 0.17%, S&P 500 futures gained 0.21%, and Nasdaq futures gained 0.49%.
The dollar index quickly fell more than 20 points to 89.77. The non-US currencies euro and pound continued to rise against the US dollar.
Spot gold short – term down nearly 10 dollars, fell below the 1880 dollar mark, gold prices have rebounded slightly.
In the first five minutes after the release of the non-farm data, the COMEX gold futures main contract turnover totaled $1.483 billion.
The 10-year Treasury yield surged again after the data, briefly topping 1.100% and hitting a new high of 1.103% since late March.
The momentum of the US economy could be severely weakened
The U.S. labor market shed jobs in December for the first time in eight months, a sign that economic momentum has been severely weakened, Bloomberg commented.
In December, restrictions imposed by a surge in Covid-19 cases hit curb-sensitive industries such as bars and restaurants, and job creation fell by nearly half a million jobs during the month.
However, the government last week approved a massive bailout of nearly $900bn, and further stimulus packages are likely in the coming months. As a result, the economy is unlikely to slip back into recession, despite the weakness in the job market.
Already vaccinated? December Non-farm data widely expected to be ‘ugly’
The December non-farm payrolls data had been widely expected to be “very ugly”.
The major investment banks’ forecasts for December non-farm payrolls turned negative again, with a wide gap between them.
Ahead of the data, Wall Street had expected December payrolls to rise between minus 150,000 and minus 150,000, the unemployment rate to be between 6.6% and 7.2%, and average hourly earnings to rise between 4.3% and 4.6% at an annual rate.
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