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Companies Cut 301,000 Jobs in January

Companies cut jobs in January for the first time in more than a year as the spread of the Covid omicron variant appeared to hit hiring payroll processing firms. Private payrolls fell by 301,000 for the month, well below the Dow Jones estimate for growth of 200,000 and a marked plunge from the downwardly revised 776,000 gain in December.

 It was the first time ADP reported negative job growth since December 2020. The pandemic-sensitive leisure and hospitality industry was responsible for more than half of the decline, as Companies reported a drop of 154,000. Trade, transportation, and utilities cut 62,000 while the other services category declined by 23,000.Manufacturing also lost 21,000 positions, while education and health services reported a drawdown of 15,000 and construction fell by 10,000. Service-providing industries were responsible for 274,000 job losses, with goods producers falling by 27,000.

The ADP numbers come two days before the more closely watched nonfarm payrolls count from the Labor Department. Wall Street expects that report to show a gain of just 150,000 jobs. However,  economists and White House officials are warning the month’s numbers could be rough due to omicron and statistical effects from the way the Labor Department compiles the data.

From a business-size standpoint, the job losses were concentrated at small firms, with Companies employing fewer than 50 people seeing a drop of 144,000. Businesses with more than 500 employees lost 98,000, while medium-sized firms declined by 59,000.

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