US private sector job growth surges in December but Omicron looms

Private firms in the United States added 807,000 jobs to their payrolls in December, but economists are warning that Omicron could weigh on the labour market recovery in January.

A hiring sign stands outside a King Soopers grocery store in southeast Denver, Colorado, US
While hiring was strong in December, economists warn that disruptions from the Omicron variant of the coronavirus could weigh on jobs creation in January [File: David Zalubowski/AP]

The highly contagious Omicron variant did not appear to dent the United States jobs market recovery last month, according to private payroll figures released on Wednesday. But with the coronavirus rampaging through the country, triggering flight cancellations, and forcing workers to call in sick, Omicron is likely to drag on jobs 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 of last year – was nearly double what most analysts were forecasting.

But data for the ADP report was collected in mid-December, just as the spread of Omicron was starting to gain steam.

“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 arrived too late to significantly affect job growth in the month,” said economists at Goldman Sachs led by Jan Hatzius.

Private payrolls gains were broad-based, with employment in the services sector surging by 669,000 jobs, while the goods-producing sector added 138,000.

Within the services sector, customer-facing leisure and hospitality businesses added nearly a quarter of a million jobs last month.

A more comprehensive snapshot of the US labour market is due on Friday with the release of the closely watched monthly jobs report from the Department of Labor. Economists at Goldman Sachs boosted their estimate for December nonfarm payrolls by 50,000 to half a million jobs created after the ADP figures were published.

Regardless of how strong jobs creation was in December, some economists are warning that Omicron could have a big impact on January figures.

The most recent nationwide surge in Omicron cases has triggered widespread cancellations and closures, as already short-staffed businesses are hit with a wave of staff calling in sick,” said Michael Pearce, senior US economist at Capital Economics. “Most of those absentees will still be paid and therefore counted as employed this month. But a significant minority who do not have access to paid sick leave will not, potentially knocking hundreds of thousands off the official nonfarm payrolls tally in January.”

Pearce also noted that “Because the ADP survey counts anyone on the payroll as employed, however, whether they are paid or not, a big discrepancy could emerge between the two employment measures.”

Omicron is not the only headwind facing the US labour market recovery. An ongoing shortage of workers is also dragging on jobs creation.

On Tuesday, the Department of Labor reported that there were 10.6 million job openings at the end of November, which is high by historical standards – while Americans are feeling so confident about their employment prospects that they continue to quit their jobs in record numbers.

Source: Al Jazeera