Private firms in the United States added 807,000 jobs to their payrolls in December, but economists warn that Omicron could weigh in on the labor market recovery in January.
The highly contagious Omicron variant apparently did not halt the recovery of the United States labor market last month, according to private payroll figures released on Wednesday. But with the coronavirus raging across the country, flight cancellations caused, and forcing workers to report sick, Omicron is likely to delay job creation in January, economists warn.
Private firms added 807,000 jobs to their payrolls in December, according to the ADP National Employment Report.
Produced by the ADP Research Institute and Moody’s Analytics, the report’s headline number – the highest reading since May last year – was almost double what most analysts had predicted.
But data for the ADP report was collected in mid-December, just as the distribution of Omicron began to gain steam.
“This morning’s ADP data were in line with a strong pace of job growth in December, suggesting that the Omicron wave may have come too late to significantly impact job growth in the month,” led economists at Goldman Sachs of Jan Hatzius said.
Private payroll profits were broad-based, with employment in the services sector rising by 669,000 jobs, while the goods-producing sector added 138,000.
Within the service sector, customer-oriented leisure and hospitality businesses added nearly a quarter of a million jobs last month.
A more comprehensive snapshot of the U.S. labor market is on Friday with the release of the Department of Labor’s accurate monthly work report. Economists at Goldman Sachs have raised their estimates for December non-farm payrolls by 50,000 to half a million jobs created after the ADP figures were published.
No matter how strong job creation was in December, some economists warn that Omicron could have a big impact on January figures.
“The most recent nationwide upsurge in Omicron cases has caused widespread cancellations and closures, as businesses are already hit with a short staff by a spate of staff reporting sick. ” said Michael Pearce, senior U.S. economist at Capital Economics. “Most of those absent will still be paid and will therefore be considered employed this month. But a significant minority who do not have access to paid sick leave will not do so, which could potentially beat hundreds of thousands of official non-farm payrolls in January. ”
Pearce also noted that “Because the ADP survey counts anyone on the payroll as employed, but whether they are paid or not, a big difference can arise between the two employment measures.”
Omicron is not the only headwind facing the recovery of the US labor market. A constant shortage of workers is also delaying job creation.
On Tuesday, the department of labor reported that 10.6 million jobs at the end of November, which is high by historical standards – while Americans feel so confident about their job prospects that they continue to resign their jobs in record numbers.