The U.S. private sector unexpectedly shed jobs in December as employment trends weakened sharply across the country before Congress passed its latest virus-relief package.

Private payrolls fell by 123,000 during the final month of 2020, according to ADP’s closely watched report, marking the first monthly decline since April. This followed a revised increase of 304,000 jobs in November. Consensus economists expected to see 75,000 jobs come back in December, according to Bloomberg data.

The service-providing sector was hit hard again after a brief reprieve in recent months, as tighter lockdown measures came back into effect across the country starting in mid-November. Leisure and hospitality industries lost 58,000 payrolls in December, followed closely by trade and transportation industries with a decline of 50,000. Manufacturing industries also lost 21,000 private payrolls in December, unwinding some of the goods-producing sector’s recent recovery. The industries that did see net payroll gains during December – including business services and education and health services – posted only modest increases.

“America's great jobs machine ran into a wall of rising coronavirus cases and state lockdowns which puts the entire economic recovery from recession at risk,” Chris Rupkey, chief financial economist for MUFG Union Bank, said in an email Wednesday morning. “The heart of every recession is job losses and right now the decline in jobs at year end is hinting that the dark days of the labor market last spring have returned. A new government is returning to Washington and legislators are going to have their hands full as economic weakness seems to have returned.”

The latest ADP payrolls report precedes the monthly Labor Department payrolls report by two days, but has been an unreliable predictor of the results in the government report over the course of the pandemic due to differences in survey methodology. With the ADP report, only individuals on an active payroll are counted as employed, while the Labor Department counts any individual that received a paycheck during the survey week for the report.

In October, for instance, ADP reported that the economy gained just 403,900 private payrolls, whereas the Labor Department reported an increase of 877,000. ADP’s undershoot was slightly less dramatic in November, however.

But one theme has been consistent throughout virtually all the recent jobs data: Hiring weakened notably in the final month of the year and layoffs picked back up. New weekly jobless claims jumped to a three-month high during December and stayed elevated at more than 800,000 per week for the majority of the month, as rising COVID-19 cases and colder weather dragged on employment.