The December Jobs The report is said to show that attitudes recovered last month before the rapid spread of the new variant of Omicron coronavirus posed a new threat to the economy and its recovery from the pandemic.
The number of employees likely rose by 400,000 last month, while the unemployment rate is likely to have fallen to 4.1%, according to a median estimate by Refinitiv economists. That would be a significant improvement on November, when the economy was just about to pick up 210,000 new jobs – less than half of the forecast.
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The report will only include data from the first half of the month before a staggering spike in cases caused by the highly transmissible variant of Omicron. The US now reports a 7-day moving average of more than 540,000 cases.
While it is still unclear what the fast-moving variant will ultimately mean for the health of the economy, the effects on daily life are already being felt: Thousands of flights have been canceled, Broadway shows are closing their doors and a growing number of schools have postponed their reopenings .
Many economists expect omicron to have a minimal impact on the December job report and instead impact the January hiring.
“The job report from December will not yet show the extent of the disruptions in the labor market caused by omicron. But the January report will certainly do that, ”said Julia Pollack, chief economist at ZipRecruiter. She predicted that industries hardest hit by the pandemic – such as leisure and hospitality, travel, retail, and arts and entertainment – would have the greatest impact.
Other economic indicators have been bullish so far, despite the Omikron surge: for example, the ADP National Employment Report released on Wednesday showed that private employers hired a staggering 807,000 workers last month, surpassing Wall Street’s expected increase of 400,000 jobs .
Overall, US companies posted an average monthly job growth of 625,000 over the last three months of the year, beating the annual average of 514,000. Job growth exceeded 6 million in 2021, but private sector payrolls are nearly 4 million below pre-pandemic levels
The projected growth of 400,000 jobs could justify the possibility of a rate hike by the Federal Reserve as early as March; Now that the labor market is closer to maximum employment, the Fed could move on to the second part of its dual mandate – stabilizing prices.
The minutes of the Federal Reserve’s meeting on May 14-15 December shows that if economic conditions continue to improve, many policymakers believe that if economic conditions continue to improve, they believe they will soon hit their jobs target, opening the door for the Fed’s first rate hike in three years. The Fed cut rates to near zero in March 2020 as the nation faced an unprecedented pandemic that froze economic activity and plunged the country into the worst recession in nearly a century.
“Participants generally stated that given their individual outlook for the economy, the labor market and inflation, it may be justified to raise the key rate sooner or faster than participants had previously expected,” the company said on Wednesday Protocol . “Some participants also noted that it might be appropriate to begin reducing the Federal Reserve’s balance sheet relatively soon after the Federal Funds Rate began to increase.”
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Despite keeping rates near zero during the meeting, officials unanimously forecast at least one rate hike in the next year. This marked a significant shift from September, when half of central bankers felt that rate hikes were not justified until at least 2023.
Officials now expect rates to be 0.9% at the end of 2022, 1.6% at the end of 2023 and 2.1% at the end of 2024.