US companies slash jobs for the first time since April, ADP report shows

U.S. private employers in December slashed jobs for the first time in six months, suggesting the labor market's recovery from the coronavirus crisis has stalled amid a resurgence in cases nationwide, according to the ADP National Employment Report released Wednesday.

The report showed that companies shed 123,000 jobs last month, missing the 88,000-job increase that economists surveyed by Refinitiv had predicted.

"As the impact of the pandemic on the labor market intensifies, December posted the first decline since April 2020," Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement.

The job losses were concentrated heavily in the leisure and hospitality industry, one of the sectors hit hardest by the pandemic. The industry shed 58,000 jobs in December as state and local governments implemented new lockdown measures restricting indoor dining, while cold weather limited restaurants' ability to offer outdoor dining.

Trade, transportation and utilities eliminated 50,000 workers, and information services cut 6,000. Manufacturing also saw a decline of 21,000 jobs, while education fell by 1,000.

Large companies accounted for the bulk of the layoffs: Businesses that employ more than 1,000 workers cut 169,000 jobs last month. Small businesses with fewer than 20 workers cut 16,000 positions. Medium businesses increased their headcount by 37,000.

While the data are typically a good indicator of what to expect in the more closely watched jobs report from the Labor Department, the ADP figure has regularly missed the government's count since the pandemic began in mid-March. (In June, for instance, ADP initially said private employers added 2.37 million jobs -- well below the 4.8 million reported by the U.S. government. It also said the economy lost 2.7 million jobs in May, while the Labor Department reported a gain of 2.5 million).

The Labor Department's jobs report, which will be released Friday at 8:30 a.m. ET, is predicted to show the U.S. economy added 100,000 jobs last month, down from November's gain of 245,000. Analysts anticipate unemployment will hold steady at 6.7%.

Read more at FOXBusiness.com.