Payroll processing company ADP announced Wednesday that January was the worst month for job cuts in January in over a decade. The spread of Covid Omicron appeared to have impacted hiring.
Private payrolls dropped by 301,000 month-end, which is below the Dow Jones estimates for growth at 200,000. It was a sharp drop from last year. downwardly revised 776,000 gain in December.This was ADP’s first negative report on job growth since December 2020.
More than half the drop was due to pandemic-sensitive hospitality and leisure industries. Companies reported a decline of 154,000. The decline in trade, utilities and transportation was 62,000. However, the number of other services declined by 23,000
Also, 21,000 manufacturing jobs were lost. Education and health services saw a decline of 15,000 while construction declined by 10,000.
The 274,000 job losses in service-related industries were caused by the decline of goods production, which fell by 27,000
Nela Richardson ADP’s chief economist said that “the labor market recovery was impeded at the start 2022 by the effects of the omicron variation and its significant, although likely temporary effect to job growth.”
ADP data are available two days prior to the Labor Department’s closely-watched nonfarm payrolls numbers. Wall Street is expecting that the report will only show an increase of 150,000 jobs. However, economists have not yet confirmed this. White House officials are warningDue to the possibility of a rough month, omicronThe Labor Department creates data that has statistical and other effects.
ADP could report a lower number Friday but the actual numbers can be significantly different. In December alone, ADP’s total — initially put at 807,000 before the revision — was well above the Bureau of Labor Statistics’ count of 211,000 for private payrolls and 199,000 for the total nonfarm number.
Small businesses saw the most job losses. Companies with fewer than 50 employees experienced a decrease of 144,000. Medium-sized businesses lost 59,000, and those with over 500 employees suffered a loss of 98,000.
Federal Reserve officials closely monitor the employment numbers. The policymakers believe that the U.S. has a strong economy with full employment. have teed up a series of interest rate increasesThis year.