As 2021 came to a close, and Americans looked toward the new year, the nation’s employers fell drastically short of economists’ December hiring forecasts. Analysts assumed employers would add around 400,000 new jobs last month, but they only produced half of that.
On Friday morning, the Department of Labor released an “Employment Situation Summary.” It noted that American businesses added 199,000 new jobs last month, which fell far short of the projected hiring forecasts. In fact, numbers didn’t change much from November when employers added 210,000 new jobs.
The disappointing projections aren’t a complete surprise though. American businesses across the nation still have a large demand for labor. Yet several factors have led to many workers passing on job opportunities. Covid-19 fears, a lack of childcare, and significant savings have all played a roll as to why some individuals haven’t re-entered the workforce.
The latest Omicron variant of the virus is spreading across the country in record numbers. The variant is one more obstacle to employment growth in early 2022. The missed hiring forecasts aren’t a good sign for the new year since economists are predicting that Omicron will impact businesses even more than it did in December. Oxford Economics lead economist Lydia Boussour touched on the subject earlier this week.
“It is only a question of time before the highly infectious variant hinders labor market progress,” Boussour said, according to CBS News.
“Record coronavirus caseloads are disrupting business activity due to staff illness or quarantine,” Boussour added. “[The virus is] keeping workers away from job seeking due to health concerns and school disruptions, and leading consumers to curb their spending on in-person services.”
Hiring Forecasts Don’t Paint Full Picture of Overall Economic Growth
While economists’ hiring forecasts didn’t pan out in December, overall economic signs are pointing upward. America’s unemployment rate dropped below 4% and wages increased across the board.
The Department of Labor also revealed that unemployment is down to 3.9% as of last month. That’s a .3% decrease from November’s 4.2% unemployment rate. It’s the lowest unemployment rate since the Covid-19 pandemic sent the American economy into a downward spiral. In fact, in February 2020, the nation had a 3.5% unemployment rate.
Even though hiring forecasts didn’t meet expectations, average salaries have increased recently as well. Average hourly earnings fared better than their forecast by 0.6% in December compared to November. It’s the largest increase in employee earnings since April 2020. In addition, salaries increased a total of 4.7% compared to this time last year. The wage hikes highlight the fact that American business owners are willing to increases salaries to attract and keep workers on staff.
The Department of Labor’s job summary report is comprised of two surveys. They include one that focuses on households, and another based on employers. As already referenced, the surveys show that American businesses didn’t live up to hiring forecasts. Yet the household survey showed steady improvement in employment. Indeed’s economic research director Nick Bunker shared his thoughts on the contrasting surveys with Bloomberg this week.
“Both sides of today’s report agree the labor market is recovering. The disagreement is just over how fast it is happening,” Bunker explained to the outlet.