Business loss

America lost 301,000 private sector jobs in January, ADP says

By Allison P. Spencer

The loss of 301,000 jobs in the private sector surprised economists who had predicted that companies had added 207,000 jobs. It is also the first decline in the ADP report since December 2020.

The ADP report relies on private payrolls, unlike the government employment report which counts all workers. Also note: ADP counts workers on a company’s payroll, whether or not they have been sick.

That report from the Bureau of Labor Statistics is due Friday morning, with economists predicting the creation of 150,000 jobs, according to Refinitiv. But not all economists are so optimistic. Goldman Sachs (GS) expects a drop of 250,000 jobs in Friday’s report, for example.

“Details from ADP’s employment report point to a significant and likely temporary slowdown in Omicron’s January employment,” the bank’s economists said.

Wednesday’s report drop was also a sharp slowdown from December’s report, which showed a whopping 807,000 jobs added because the Omicron variant of Covid-19 was not as prevalent at the time.

But in January, coronavirus cases spiked. This has affected business, led to worker absenteeism and temporary school closures.

Highlight multiple pandemic labor market trends

The past month has been an amalgamation of nearly every labor market trend seen during the pandemic, including business closures, labor shortages, and the negative effects of childcare and school closures, ADP Chief Economist Nela Richardson told reporters on a conference call on Wednesday.

Almost every major industry recorded losses, led by leisure and hospitality, where more than 150,000 jobs were lost. Only mining added 4,000 jobs.

Small businesses with fewer than 50 employees saw the most losses, although businesses of all sizes lost positions.

Even so, “there is good evidence to suggest that January represents a speed bump, not a shutdown,” as Omicron cases begin to decline, Richardson said. Employers’ appetite for hiring was strong in 2022.

America still has more vacancies than workers to hire – a trend that will likely continue this year. But as companies compete for workers. they are all also trying to fend off runaway inflation. This has pushed up wages, especially in lower-paying service jobs and consumer-facing jobs, Richardson said.

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Allison P. Spencer
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