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Hiring by the U.S. private sector increased the most in seven months in December, before the effects of the Omicron variant hit the job market.
Private payrolls increased by 807,000 last month, according to a report by the ADP payroll processor in mid-December. It was the biggest increase since May and eclipsed economists’ expectations in a Reuters survey for an increase of 400,000.
“The December job market has strengthened as the fallout from the Delta variant wears off and Omicron’s impact has yet to be seen,” said Nela Richardson, chief economist, ADP.
The service sector, which has been hardest hit by the pandemic restrictions, has led to the bulk of hiring with 669,000 jobs. Leisure and hospitality accounted for 246,000 of these gains, while commerce, transportation and utilities created 138,000 jobs. In contrast, the manufacturing sector created 138,000 jobs.
Employment was also led by large firms – those employing more than 500 workers – with 389,000 payrolls added last month.
The job gains come even as Americans quit their jobs in record numbers, as they seek better opportunities elsewhere or turn to self-employment. Economists also attribute the quits to growing household wealth, early retirement and childcare issues.
Despite the labor market recovery from the depths of the pandemic, the private sector wage bill is nearly 4 million jobs below pre-Covid levels.
The data precedes Friday’s official non-farm wage report, which is expected to show the US economy created 400,000 jobs in December, while the unemployment rate is expected to drop to 4.1%, from 4.2% previously. .