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Job Cuts Hit Hard in January Inside The ADP Jobs Report – February 2022
Bottom Line: A lots happened since December of 2020. A change in presidents, a surge in inflation and how many Covid variants exactly? But the one constant had been a continued recovery in jobs. So much for that... This month’s ADP private sector jobs report showed a huge reversal in jobs with private companies cutting a total of 301,000 jobs during the month. That’s the worst January for jobs since, gulp – the Great Recession. Before wading into those waters let’s take a look at what happened during the month. Starting with job changes based on company size.
- Small businesses: -144,000
- Midsized: -59,000
- Large: -98,000
Ok, yeah. This really is a really bad report. Not only were the job losses across the board – they were largest with the smallest companies. Small businesses are leading economic indicators and this breadth is really problematic. Now, analysts are blaming the omicron surge, but that’s odd because last January was much worse for the country overall and yet jobs were added. Ditto through the delta surge. One month does not a trend make but I had concerns prior to this report. The impact of inflation was already a front-burner economic concern and I’d referenced the possibility of recessionary concerns multiple times over the past month. It’s simply not possible for the cost of life to continue to rise faster than wages without problems arising. The economy can’t continue down the path its been going indefinitely. My hope is that this is a one-off. My concern is that it’s part of something bigger.
These were the top industries for job losses in January:
- #1: Leisure and Hospitality
- #2: Trade, Transportation & Utilities
- #3: Manufacturing
Yeah, this isn’t good either. Leisure and hospitality losses speak to consumer spending concerns. Manufacturing job losses speak for themselves. But here’s the bigger thing. Every sector saw job losses except natural resources and mining. Yikes. We’re left with having to hope this really was just about omicron for whatever reason and that as it’s leaving the jobs return. As I’ve mentioned, while I’m hopeful, I’m also skeptical that’s all this was. Tomorrow we’ll get the full jobs picture with government jobs added in.