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Covid-19: US private hiring surged to 807,000 in December – ADP

WASHINGTON, Hiring in the United States surged in December, with private companies adding 807,000 workers, particularly in the service sector, payroll services firm ADP reported.

It was a big upswing from the 505,000 gain in November and nearly double the increase economists had been expecting, but the fast-spreading Omicron variant of Covid-19 could hit job growth in the months ahead.

The data may offer a preview of the government employment report due out Friday, though the report can be far out of line with the official figures.

ADP said service firms, including restaurants and hotels that were the hardest hit by the Covid-19 pandemic, added 669,000 workers last month, while goods-producing companies hired 138,000.

“December’s job market strengthened as the fallout from the Delta variant faded and Omicron’s impact had yet to be seen,” ADP chief economist Nela Richardson said.

“Job gains were broad-based, as goods producers added the strongest reading of the year,” Richardson said.

Some forecasters are expecting a blockbuster government jobs report after the November data showed the US economy added a disappointing 210,000 positions, but the consensus forecast is for a more moderate increase of 440,000 jobs in the final month of 2021.

Companies nationwide have struggled to fill open positions and retain employees, and the government also recently reported a record number of workers leaving their jobs in November, straining businesses further.

Ian Shepherdson of Pantheon Macroeconomics acknowledged that ADP is not a reliable predictor of the official jobs data, but said the government report may capture a “sweet spot” when the Delta wave of Covid-19 was waning and before Omicron hit with force.

He expects a million jobs added in December — a level many were projecting for November.

“The story here, perhaps, is that the fading of some of the forces holding back labor supply — enhanced/extended unemployment benefits, and school/childcare closures — combined with strong labor demand, triggered rising participation late last year, facilitating a surge in payrolls,” he said in an analysis.

But Lydia Boussour of Oxford Economics has a more cautious outlook, expecting 405,000 jobs added last month.

And she warned that “near-term labor market prospects are dimming amid a tidal wave of Omicron cases.”

ADP said private hiring in the fourth quarter averaged 625,000, topping the 514,000 average for the year.

But “while job gains eclipsed six million in 2021, private sector payrolls are still nearly six million jobs short of pre-Covid-19 levels,” Richardson said.