A previous version of this report provided an inaccurate figure for the decline in small-business jobs. The story below has been corrected.
The numbers: Private-sector employment fell in December as consumer and business activity in some states was affected by lockdowns to combat the coronavirus pandemic which has worsened across much of the country.
Employers in the private sector shed 123,000 jobs in December — the first decline since April, according to the ADP National Employment Report reported Wednesday.
Economists polled by the Wall Street Journal had expected a December gain of 60,000 private sector jobs.
What happened: Job losses were primarily concentrated in the retail and leisure and hospitality sectors.
From a wider lens, service sector providers overall subtracted 105,000 jobs in December. Meanwhile goods producers shed 18,000 jobs. Manufacturing lost 21,000 jobs.
By company size, small businesses lost 13,000 private-sector jobs in December and large businesses lost 147,000. Medium-sized businesses, defined as firms with 50 to 499 employees, added 37,000 jobs.
Big picture: Economists use ADP’s data as a guide to the Labor Department’s employment report, which will be released Friday and covers government jobs in addition to the private sector.
Economists polled by MarketWatch expect the government’s report to show that the labor market weakened with nonfarm employment up by only 50,000 in December. That would be the weakest report since the depths of the lockdown in April.
Only a handful of economists were forecasting a decline in payroll employment in December prior to the ADP report.
Economists are increasingly worried about the health of the labor market. Top researchers at the American Economic Association annual meeting this week warned about the possibility of a jobless recovery from the pandemic.
What are they saying: “Grim, but a positive payroll number Friday is still a good bet,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He noted that the ADP data has been weaker than the government’s estimate of job growth over the past seven months.
Market reaction: Stocks were mixed, reacting to strong showing by Democrats in the two U.S. Senate run-off elections in Georgia. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.38% was up 410 points while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.02% was only up 3 points but well off earlier lows.