Companies unexpectedly cut 301,000 jobs in January

Companies cut jobs in January for the first time in over a year. Private payrolls fell by 301,000 for the month of January, payroll processing firm ADP reported Wednesday.

This is well below the Dow Jones estimate for growth of 200,00 and a drop from the revised 776,000 gain in December (CBS News). This is the first time ADP reported negative job growth since December 2020.

The leisure and hospitality industry saw the greatest decline with a drop of 154,000 jobs. Trade, transportation and utilities lost 62,000. Manufacturing also lost 21,000 positions, while education and health services reported a decline of 15,000. Construction fell by 10,000. Other services dropped by 23,000. Service-providing industries saw a 274,000 loss, with goods producers falling by 27,000.

ADP’s chief economist, Nela Richardson said, “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.”

This report comes only two days before nonfarm payrolls count from the Labor Department is released, which is more closely watched.

White House officials are warning this month’s numbers could be rough due to omicron and statistical effects from the way the Labor Department compiles data.

ADP’s report could potentially signal a weak number, but the two counts may differ significantly. In December, ADP totalled 807,000 prior to the revision to 776,000. This was well above the Bureau of Labor Statistics’s count of 211,00 for private payrolls and 199,000 for total nonfarm numbers.