Private payrolls gained 807K workers in December: ADP

U.S. businesses added 807,000 jobs in December despite the emergence of the omicron variant, according to data released Wednesday by payroll processor ADP, far exceeding expectations.

The ADP National Employment Report, a closely watched gauge of private sector job growth, showed private non-farm payrolls adding almost twice as many new workers as analysts projected. Private sector job growth was spread broadly among businesses of all sizes and industries, said ADP chief economist Nela Richardson.

“December’s job market strengthened as the fallout from the delta variant faded and omicron’s impact had yet to be seen,” Richardson said in a statement. “Job gains were broad-based, as goods producers added the strongest reading of the year, while service providers dominated growth.

Businesses with fewer than 50 employees added 204,000 workers last month, while mid-sized firms added 214,000 new workers and companies with more than 500 employees added 389,000 new workers to payrolls. Good-producing businesses added 138,000 jobs while service sector firms added 669,000. The leisure and hospitality sector, which is deeply vulnerable to COVID-19 shocks, also added 246,000 jobs last month despite the omicron surge.

The ADP report is the latest promising signal from the labor market ahead of the Department of Labor’s Friday release of the December jobs report. The federal report tracks both private and public sector jobs through two surveys: a survey of businesses to see how many workers have been added to payrolls, and a survey of households to assess how many Americans are seeking and finding jobs.

While the ADP report and federal jobs report often diverge, the strong private sector payroll reading follows several weeks of historically low jobless claims and strong consumer activity.

Seasonally adjusted new claims for unemployment insurance averaged slightly more than 200,000 per week in December, roughly 20,000 below pre-pandemic levels, and the number of Americans on some form of jobless aid dropped to the lowest total since March 2020.

Demand for workers has also reached historic highs as businesses struggle to meet the rush of demand unlocked by the recovery from the recession amid new health concerns. A record 4.5 million Americans quit their jobs November as employers sought to fill 10.6 million job openings. Hires rose from 6.5 million in October to 6.7 million in November, a sign that most job-quitters are switching to new firms instead of dropping out of the workforce.