As previewed earlier when we said “December Payrolls Preview: Brace For A Very Ugly Number“, as a result of the second wave of covid shutdowns economists expected a sharp slowdown in December job growth in the U.S., with more than a quarter of those surveyed – including Goldman – predicting a negative print. Yet as Bloomberg notes, while the data is “almost certain to show an ongoing loss of labor-market momentum — indeed, it could reveal outright job losses — one could argue that it’s already outdated.” After all, a fresh stimulus package was passed towards the end of last month, and there is every chance of a further one in the months to come. Moreover, the prospect of vaccine-related normalization still hovers in the future, even if the current reality of the pandemic looks fairly grim. Finally, with this the last payroll month under the Trump admin, it is hardly a secret that the BLS would look to have a kitchen sink month where the upward “government massaged data” over the past 4 years catches down to reality.
With all that in mind, it was still a surprise just how ugly the December print was, with the BLS reporting that a whopping 140K jobs were lost last month on consensus expectations of a 50K print (although Goldman’s -50K forecast was close).