US employers added a record number of jobs in 2021, as a gauge of layoffs fell to half-century lows and available positions fueled by strong demand for labor as the economy recovers from pandemic-related shutdowns.
But the pace of gains in the labor market could slow early next year due to the uncertainty generated by the Omicron version of the COVID-19 pandemic, especially in restaurants, hotels and other places where people gather.
Applications for unemployment benefits, a proxy for layoffs, have hit a near five-decade low in recent weeks. The Labor Department said Thursday that jobless claims for the week ended December 25 fell from the previous week to a seasonally adjusted 198,000. The previous week’s four-week moving average, which gauges volatility, fell to its lowest level since October 1969.
Strong job creation has been a cornerstone of strong economic growth in 2021 and will be relied upon to shore up gains next year in the face of prolonged headwinds tied to the pandemic, increased inflation and supply constraints.
Jobless claims will be closely monitored in the coming weeks for any signs that Omicron Editions is letting employers lay off workers. Claims data, which is reported weekly, is often an early sign that recruitment, and the broader economy, is shifting.
“So far we haven’t seen a noticeable impact from Omicron on labor market data, at least in terms of claims data,” said Nancy Vanden Houghton, chief US economist at Oxford Economics, adding that recently A census survey also showed no major impact. An increase in the number of firms laying off workers. “I think businesses are trying to stay open, especially given the evidence that Omicron has mild symptoms. produces,” he said. Still, he added, the variant could accelerate claims in the coming weeks.
Oxford Economics expects employers to add 5 million payroll jobs in 2022, which equates to an average of more than 400,000 a month. According to the Labor Department, it will be a slight slowdown compared to this year, when US employers added an average of 555,000 per month, or 6.1 million jobs, during the first 11 months of 2021. This year’s job growth is already the largest on record since 1940.
The unemployment rate is on track to fall to 3.7 per cent by the fourth quarter of next year, Ms Vanden Houten said – slightly above the Federal Reserve’s estimate for the end of next year. The unemployment rate in November was 4.2%.
Pantheon Macroeconomics, another forecasting firm, expects employers to add an average of 450,000 jobs a month in 2022, and the unemployment rate to average 3.5% in the fourth quarter. PNC Financial Services Group estimates an average of 350,000 jobs will be added monthly next year, and the jobless rate will drop to 3.8% by the fourth quarter.
“Omicron could reverse growth patterns with some weak job growth in the first few months of the year, and strong job growth thereafter,” said PNC chief economist Gus Faucher.
So far only there are indications of minor economic impact due to the variant. Airline flights have been halted due to crew shortages, hockey and basketball games have been canceled, some businesses have temporarily closed or gone back to remote work, and public schools only went online in early January. went. Some economists have cut growth forecast for early next year.
Another impediment to employment and economic growth next year could be a shrunken labor force, which has about 2.5 million fewer workers than before the pandemic. Job opportunities exceeded 3.6 million unemployed workers in October, according to the latest available data from the Labor Department.
This has left employers struggling for workers, raising wages and sweetening bonuses and benefits—and in some cases looking for different types of workers than in the past.
Chief Executive Michael Lauber said Tusco Display lacks the staff needed to meet demand. They have responded by looking for part-time workers.
“We would still prefer to hire people on a full-time basis,” Mr Lauber said. “But there are a significant number of people out there who for whatever reason — maybe it’s elder care, maybe it’s child care, maybe it’s someone who knows what — aren’t able or willing to take a full-time position.”
The Gnadenhutten, Ohio, company, which makes custom store displays, has accelerated its recruitment of students, with nine high-school students joining Tusco and doing light assembly work on afternoons and evenings last week. The company also recently recruited a trio of young welding students from business programs. Mr Lauber said he hoped to expand the team in 2022.
Bernard Baumhol, chief global economist at Economic Outlook Group LLC, said labor supply constraints and the evolving pandemic, however, are unlikely to derail labor market recovery in 2022.
“Our hope is that the economy will remain strong,” he said. He forecasts better hiring next year than 2021, with an average of 650,000 jobs being added monthly.
Workers, he said, have gained leverage, and this means they have become selective in the types of employment opportunities they find suitable. Self-employment has also increased.
“They are entrepreneurs and started their own business at a time when they felt they now had some financial resources to do so,” said Mr. Baumohl.
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Phil Rice of Roanoke, Texas, spent nearly 20 years in corporate finance, working for companies in the travel industry such as American Airlines Group Inc. and Expedia Group Inc. Mr. Rice has been thinking about starting his own insurance business for some time. “Then Covid kind of came along and really kind of froze that,” he said.
Mr Rice, 50, left Expedia, an online travel-booking company, in late August and plans to open his business in February after completing the required training. He is making changes to work more directly with consumers.
“I’m excited, because I have to make all the decisions,” said Mr. Rice. “But at the same time, I am also worried because I have to make all the decisions as well.”
Write Gwynn Guilford at [email protected]
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