America closed out 2021 with an unexpected slowdown in payroll gains, with just 199,000 added in December

The COVID-era jobs market doled out yet another surprise in December with the slowest jobs growth of the year. Although consensus expectations among economists were more than 400,000 payrolls, the last month of 2021 saw a tepid 199,000 new jobs, even fewer than November’s flat numbers. Lingering COVID fears, childcare challenges, and worker demands for better flexibility and wages all combined to depress hiring rates.

It’s not all bad news, though. The unemployment rate dropped sharply to just 3.9% (from 4.2% in November and 15% in Spring 2020), while the labor force participation rate held at 61.9%, a pandemic-era high. And as employers compete to attract more workers average hourly earnings went up by a solid 19 cents or 0.6% (4.7% in 2021 overall vs. 4.2% expected). However, inflation continues to outstrip wage growth.

One report last month found that COVID-19 absences are costing employers on average $1 billion per week.  But it’s important to view December’s in context. Almost every month in 2021 has seen extensive upward revisions: October’s numbers were revised upwards by 102,000 and November’s were revised upwards by 39,000. And this comes amid twelve consecutive months of jobs growth, culminating in a record-breaking 6 million jobs added across the year, following the prior year’s record-breaking losses.

From a sector perspective

The pandemic-sensitive leisure sector saw the month’s most robust growth (+53,000). That’s up from November’s modest growth of +23,000, albeit way below October’s +211,000 jobs. However, given that the Omicron wave hit the US only in late December, its full impact is not yet apparent in the numbers. January payrolls will likely tell a starkly different story for the sector.

Other sectors seeing significant job gains included goods-producing (+54,000), manufacturing (+26,000), and transportation and warehousing (+18,700). White-collar professional jobs also grew steadily.

As shoppers continued to opt for online rather than in-person shopping, retail shed 2,100 jobs for the second month in a row, wrapping up a weak holiday hiring period for the sector. However, the drop was less marked than November’s dramatic drop of -20,400 payrolls.

Jobs in the computer & electronic products sector also faltered (-900) amid continued supply chain congestion and chip shortages.

The latest wave of infections – and related school closures – will have ripple effects in the weeks and months ahead, with continued weakness, especially in pandemic-sensitive sectors. Indeed, employers across the country are struggling with a swathe of employee sickness as Covid collides with the flu season.

Adecco can help.
If you’re struggling to fill open positions – or cover sick leave – during this challenging time, we’ve got your back. We can quickly mobilize the right pre-qualified temporary staff at the right pay rate. Talk to us about how we can help you keep your operations on track while taking the pressure off your exhausted workers left holding down the fort.

In addition to connecting you with experienced workers, we can help you keep them through optimized wages and benefits, and better training. Learn more about the global trends we’re watching at Adecco.