Ômicron hasn’t stopped job recovery in the United States — yet

The United States ended 2021 with strong job gains, economists say. But just days after the start of the year, the Ômicron variant is causing an increase in infections and a major conflict in companies. Will this hinder job recovery?

It’s a little early to say, in part because it’s not clear how long the Ômicron infection outbreak will last.

The US government will release its official job count for December on Friday (7). But the report is unlikely to show the impact of the new variant yet, because the surveys it’s based on are conducted mid-month.

People were already getting sick with the new variant by mid-December, but the rise in infections has not yet caused the staff shortages the companies are dealing with now.

Economists predict the US job market created 400,000 jobs in December, nearly double the previous month’s count, according to a Refinitiv survey. The unemployment rate is expected to drop 0.1 percentage points to 4.1%, a new low for the pandemic era.

On Wednesday (5), the ADP Employment Report, which measures employment growth in the private sector, exploded similar forecasts and showed 807,000 jobs added in December.

After this sharp rise, Goldman Sachs economists added another 50,000 jobs to their forecast for Friday’s government count, bringing it to 500,000 in total.

“This morning’s ADP data was consistent with a strong pace of job growth in December and suggests that the Ômicron wave may have arrived too late to significantly affect job growth for the month,” they said.

That said, hiring vacations may have looked a little different in December, as the pandemic has emphasized online shopping. This has resulted in weaker-than-usual retail hires but strong job growth in storage and transportation, says Daniel Zhao, senior economist at Glassdoor.

“Labor shortages may also have encouraged employers to convert seasonal vacation workers into full-time workers, rather than firing them in December and January,” Zhao said.

US employers announced the lowest number of job cuts on record last year, according to a report by outplacement and career transition firm Challenger, Gray & Christmas.

In December alone, job cuts were more than 75% smaller than in December 2020.

If Friday’s report forecast is true, the country would have added about 6.5 million jobs in 2021 — an impressive achievement, although it still leaves us with 3.5 million compared to the February 2020 level.

Weekly claims for unemployment benefits have returned to pre-Covid levels. Last week, 207,000 American workers applied for benefits, adjusted for seasonal fluctuations. Without seasonal adjustments, however, claims exceeded 315,000, a sharp increase from the Christmas week.

Last week’s data showed the four-week continuous average claims at its lowest level in 52 years.

Much of the recovery has consisted of returning to pre-pandemic strength. But we don’t talk enough about the nearly two years of job creation that were lost on top of that, ADP chief economist Nela Richardson said on Wednesday.

Just getting back to the February 2020 level is not the end of the recovery. The US job market still has a long way to go – with or without Ômicron.

For the start of the new year, the latest wave of infections could lead to some weakness in pandemic-sensitive sectors such as leisure and hospitality.