Private sector cut 123K jobs in December, says ADP

Private sector employment declined by 123,000 jobs in December, according to payroll giant ADP, in a sign of continued economic fallout from the COVID-19 pandemic, though the professional services like accounting saw a modest increase.

The ADP National Employment Report found that small businesses lost 13,000 jobs in December. Of those, small businesses with between one and 19 employees subtracted 16,000 jobs, but that was partially offset by a gain of 3,000 jobs at small businesses with between 20 and 49 employees. Midsized businesses with between 50 and 499 employees also gained 37,000 jobs. However, large businesses lost 147,000 jobs. Of those, businesses with between 500 and 999 employees gained 22,000 jobs, but that was more than offset by a loss of 169,000 jobs at companies with 1,000 employees or more.

"As the impact of the pandemic on the labor market intensifies, December posted the first decline since April 2020," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement Wednesday. “The job losses were primarily concentrated in retail and leisure and hospitality.”

The goods-producing sector subtracted 18,000 jobs, while the service sector lost 105,000 jobs. However, there was a gain of 12,000 jobs in professional and business services such as accounting, tax preparation and other services. The financial activities sector also gained 2,000 jobs as Wall Street continued to perform well despite difficult economic conditions across much of the country. Franchise job employment fell by 5,300 jobs.

“The obvious clear message from the ADP report is that the economy is struggling to avoid backsliding into recession,” said Mark Zandi, chief economist at Moody’s Analytics, which compiles the monthly employment report with ADP. "The intensifying pandemic, more infections, hospitalizations and deaths since the fall are doing significant damage to the job market. You can see that by the job declines in retailers, restaurants, the accommodation industry, personal and recreational services. These are industries that have been forced to resume laying off workers, and other industries have turned a bit more cautious in their hiring. The economy ended 2020 on a very soft note. After a number of months of job gains, it’s disconcerting to see the job losses in December.”