US private hiring slumps in ominous labor market sign

WASHINGTON - US private businesses shed jobs last month for the first time since December 2020 as the Omicron strain again complicated workplaces, potentially a bad sign for the upcoming government employment report.

Payroll services firm ADP reported Wednesday private employment declined by 301,000 in January, far worse than analysts' expected and which the survey blamed squarely on the new Covid-19 variant.

"The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth," ADP Chief Economist Nela Richardson said.

The data cast an ominous shade over the Labor Department employment report due out Friday, which is expected to show weak hiring in January of under 200,000 as businesses in the world's largest economy faced a renewed onslaught from the virus.

"We forecast the US payroll count turned negative in January with a net loss of 45,000 jobs -- the first decline in over a year," Lydia Boussour of Oxford Economics said, noting that seasonal adjustment factors will "soften the blow."

The data will be closely watched by the Federal Reserve, which has strongly indicated it will hike rates for the first time since the pandemic began in March to fight inflation, but could see its plans disrupted if the economy deteriorates.

However, Boussour predicted "a temporary pullback in the payroll count won't alter the Fed's bullish view of the labor market," where wages have grown and the unemployment rate has declined as price increases reached multi-decade highs.

AFP