: ‘Grim and unlikely to get much better before the spring’: economists react to December employment report

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The U.S. December employment report showed a loss of jobs for the first time since last April.

Businesses and government shed 140,000 jobs last month, with the unemployment rate holding steady at 6.7%.

See: The economy is missing 10 million jobs with little prospect that they’ll be recovered anytime soon

Stocks opened higher Friday, despite the weak employment data, with the S&P 500 and Nasdaq Composite touching all-time highs. The Dow Jones Industrial Average DJIA, 0.17% rose 88 points, or 0.3%, to 31,129, while the S&P 500 SPX, 0.49% gained 18 points, or 0.5%, to 3,822. The Nasdaq Composite COMP, 0.78% advanced 98 points, or 0.8%, to 13,165. 

Below are some initial reactions from economists:

  • “The report is remarkably weak with leisure and hospitality down almost 500,000 jobs. It’s all about the Covid resurgence,” said Jeffrey Rosenberg, senior portfolio manager at BlackRock, in an interview with Bloomberg.
  • “The more reassuring aspect of the report is that employment declines were very concentrated, with most industries outside leisure and hospitality seeing gains. It still looks like GDP expanded in Q4 2020,” said Brian Coulton, Fitch Chief Economist.
  • “In one line: Grim and unlikely to get much better before the spring. The details tell a story consistent with the surge in COVID cases in recent months, and the restrictions imposed to try to contain the pandemic,” said Ian Sheperdson, chief economist at Pantheon Macroeconomics. The Nasdaq Composite Index COMP, 0.84% climbed 326.69 points, or 2.6%, to reach a milestone at 13,067.48, a closing high.
  • “Employment is chilled but not frozen. While these bleak numbers represent a weak handoff to 2021, the labor market recovery is expected to strengthen over the spring and summer as vaccinations lead to a gradually improving health situation. We foresee monthly job creation averaging about 400k in 2021 with a slow start to the year followed by a mini summer boom, and the economy recovering about 6mn jobs,” Gregory Daco, chief U.S. economist at Oxford Economics.

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