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Wall Street predicts hiring accelerated in December and the U.S. added more than 400,000 new jobs, but the surging omicron strain of the coronavirus is a wild card.
Here’s what to watch in the monthly employment report on Friday.
Headline number …
The U.S. likely gained 422,000 jobs last month, according to economists polled by The Wall Street Journal. If so, it would double the paltry 210,000 increase in November.
Some economist suspect an even bigger gain given aggressive efforts by companies to add workers.
For one thing, large payroll processor ADP said the private sector added 807,000 jobs last month. And a pair of ISM business surveys also suggest employment improved.
The hiring shortfall in November, meanwhile, is considered suspect due to potentially faulty seasonal adjustments by the government.
Many economists think the November jobs total will be raised and that some of the supposed hiring shortfall in November will be made up in December.
Chief economist Ian Shepherdson of Pantheon Macroeconomics, for one, predicts 850,000 new jobs were created last month.
Omicron effect
The highly contagious coronavirus strain hit the U.S. hard toward the end of the month — after the government completed its survey of employers. So little damage is expected in the December employment report. January could be a different story.
Unemployment rate
The fresh wave of hiring could tug the jobless rate down to a new pandemic low of 4.1% from 4.2% in November.
The real unemployment rate isn’t quite that low — economists think it’s about 2 percentage points higher — but there’s no doubt the labor market is tight. Companies have more than 10 million open jobs and not enough people to fill them.
What households say
A separate but less reliable survey of employment drawn from a poll of households showed that 1.14 million people found jobs in November. That’s more than five times higher than the 201,000 headline number that got all the attention from the media and Wall Street
DJIA,
The caveat? The household survey is less accurate and more prone to big swings
Yet investors will be watching closely to see if there is another large increase. Sometimes the poll captures shifts in hiring faster than the employer survey.
Size of the labor force
The percentage of people in the labor force rose two ticks in November to 61.8% and hit the highest level since the pandemic.
The problem is, it’s still really low. The so-called participation rate stood at a seven-year high of 63.4% shortly before the pandemic.
Further increases would suggest more people are entering the labor force and be a sign that the labor shortage is lessening.
Worker pay
The labor shortage has been good for working Americans. They are getting bigger pay raises these days, especially when they switch jobs.
Average hourly wages likely rose 0.3% in December, economists say.
The yearly increase in wages is expected to drop to around 4.2% from around 4.8%, but only because pay isn’t rising quite as fast as it was earlier in the year.
