Omicron Wave May Slow Pace Of Employment Growth Entering 2022
Job growth in the U.S. ended 2021 relatively strong, although it may slow some moving through the opening months of 2022 as the Omicron variant slows down the pace of hiring. In its December reading, The Conference Board’s Employment Trends Index increased to 116.63, up from 115.64 on month earlier.
“The Employment Trends Index increased again in December. And based on the latest readings of the index’s components, job growth is likely to be strong in 2022,” says Gad Levanon, head of The Conference Board Labor Markets Institute. “Nevertheless, in the very short term, job growth may be tepid as the fallout from Omicron continues.”
Levanon adds, “Hiring in in-person services industries will be most impacted by Omicron through lower consumer spending, leading to less hiring. Such industries include restaurants, hotels, personal care, entertainment and passenger transportation. In addition, an increasing number of sick or quarantined employees will force businesses to operate at lower capacity and dampen overall economic activity. Office environments will need to remain virtual or at least hybrid for the foreseeable future. Labor shortages continue to be severe and will likely remain so going forward. High wage pressures will continue to feed into price inflation. Service employers will need to automate quickly to make up for the labor shortfall.”
The Conference Board’s ETI aggregates eight labor market indicators, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly. May’s increase was driven by positive contributions from six of the eight components.