Private payrolls in the US increased in December, but Ómicron could slow the momentum

Private payrolls in the United States rose more than expected in December, according to the ADP’s National Employment Report. This points to the underlying strength of the job market, although the rapid rise in Covid-19 infections could slow momentum in the coming months.

The report showed that private payrolls increased by 807,000 jobs last month. November data was revised down to show 505,000 jobs added instead of the 534,000 initially reported. Economists polled by Reuters had expected a rise of 400,000.

The survey was conducted in mid-December, just as Covid-19 cases – driven by the Omicron variant – were increasing across the country. Economists expect the wave of winter infections to cause some disruption, but not like last summer.

The United States reported nearly 1 million new coronavirus infections on Monday, the highest daily count of any country in the world. ADP chief economist Nela Richardson told the media that Ómicron’s impact could be reflected in the January data.

“The job market continues to rebound,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “However, the Omicron variant is a substantial downside risk to the short-term labor market recovery.”

Still, demand for labor is strong amid an acute shortage of workers. The broad rise in private hiring last month was led by a 246,000 rise in the leisure and hospitality sector.

Professional and business services added 130,000 jobs, while manufacturing hired 74,000 more workers and construction payrolls increased by 62,000 jobs.