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Private Payrolls in U.S. Drop for First Time in Eight Months

  • ADP National Employment Report sees a drop of 123,000 in private payrolls in December, the first decline since April
  • Industries that have been hardest hit during COVID-19 pandemic again see major losses as new surge in infections prompts more restrictions and lockdowns
  • ADP report is generally not seen as a predictor of the monthly Labor Department jobs report due to different methodologies

Private companies shed payrolls for the first time since the early days of the COVID-19 pandemic, according to the latest ADP National Employment Report. The publication suggested that persistently high layoffs, business restrictions put in place due to a third wave of COVID-19 infections, and a drop in consumer spending have all contributed to a slowdown in the United States economic recovery.

Private payrolls were down 123,000, the first decrease since April and an unexpected result given that economists expected payrolls to increase in December. The finding follows a private payroll increase of 304,000 in November.

Leisure and hospitality businesses, which have been severely strained by the pandemic, shed 58,000 payrolls while trade and transportation lost 50,000. Manufacturing payrolls were down 21,000.

Overall, large companies dropped 147,000 payrolls while small companies were down 13,000 payrolls. The decreases were offset by added hiring in medium-sized companies, where payrolls increased by 37,000 in December.

Economists warned of several signs of a weakening economic recovery late in 2020, suggesting that the the labor market could suffer further losses before recovering later this year. They also expect that a recession will be forestalled by an economic stimulus package passed late last year, with the potential for further aid under President-elect Joe Biden and a Congress narrowly controlled by Democrats after Tuesday’s runoff Senate elections in Georgia.

The ADP report is generally not seen as a predictor for the Labor Department monthly jobs report, which uses different methodology. That report is due to be released on Friday.

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