Market Minute - January 12, 2021
by Scott Rosenquist, CFA
Employment data for the month of December was released last week showing a decline of 140,000 jobs, the first negative number since April. The unemployment remained unchanged at 6.7%. The COVID resurgence has led to new restrictions across the country and cold weather is keeping people indoors. This is reflected in the job losses from the leisure and hospitality sector which dropped by 498,000. There was job growth in professional and business services, construction, and retail but not enough to keep the headline number dipping into negative territory.
The chart below from J.P. Morgan shows employment data that reflects the toll of the virus across the economy. I shared this chart last year but wanted to show an update considering the recent employment data.
Source: Bureau of Labor Statistics, J.P. Morgan Asset Management.
Guide to the Markets - U.S. Data are as of January 8, 2021.
As you can see from the chart on the left side, the economy is still far behind in terms of regaining jobs since the start of the pandemic. The right-hand side shows the industries hit the hardest in terms of employment. As the vaccine becomes widely distributed, this should start to recover over the coming months as these businesses fully reopen and people start to get out of the house.
The economy has regained 55% of the jobs lost since the spring but the pace has slowed. The additional economic stimulus that was just passed by Congress should help and it looks like more is on the way. President-elect Joe Biden spoke on the same day the employment data was released to announce the newest members of his economic team. He highlighted the weakness of the jobs report and called for additional relief and is expected to outline another Covid-19 relief package this week.
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