Private companies in the United States added 807,000 jobs to their payrolls in December, but economists warn Omicron could weigh on the job market recovery in January.
The highly contagious variant of Omicron did not appear to start the recovery of the US job market last month, according to private payroll figures released on Wednesday. But with the coronavirus raging in the country, triggering flight cancellations and forcing workers to make themselves sick, Omicron is expected to slow job creation in January, economists warn.
Private companies added 807,000 jobs to their payrolls in December, according to ADP’s national employment report.
Produced by the ADP Research Institute and Moody’s Analytics, the report’s title figure – the highest reading since May of last year – was almost double what most analysts expected.
But data for the ADP report was collected in mid-December, just as the spread of Omicron was starting to gain momentum.
This morning’s ADP data was consistent with a strong pace of job growth in December, and it suggests that the Omicron wave may have come too late to significantly affect job growth over the past. months, “Goldman Sachs economists led by Jan Hatzius said.
Payroll gains in the private sector were widespread, with service sector employment increasing by 669,000 jobs, while the goods-producing sector added 138,000.
In the service sector, leisure and hospitality activities in direct contact with customers created nearly a quarter of a million jobs last month.
A more comprehensive overview of the US labor market is expected on Friday with the release of the Department of Labor’s closely watched monthly employment report. Goldman Sachs economists increased their estimate of the December non-farm payroll from 50,000 to half a million jobs created after the ADP figures were released.
Regardless of strong job creation in December, some economists are warning that Omicron could have a big impact on January’s numbers.
“The most recent spike in Omicron cases nationwide has triggered widespread cancellations and closures as already understaffed businesses are hit by a surge of staff calling in sick, ” said Michael Pearce, senior US economist at Capital Economics. “Most of these absentees will still be paid and therefore counted as employees this month. But a sizable minority without access to paid sick leave will not, which could cause hundreds of thousands of people to lose in the official non-farm payroll count in January. ”
Pearce also noted that “because the ADP survey counts everyone on the payroll as an employee, whether paid or unpaid, a significant gap could appear between the two measures of employment.”
Omicron is not the only headwind in the face of an upturn in the US labor market. The persistent labor shortage is also hampering job creation.
On Tuesday, the Labor Department reported that there were 10.6 million job vacancies at the end of November, which is high by historical standards – while Americans are so confident about their prospects for jobs they continue to quit in record numbers.