WASHINGTON- U.S. private employers maintained a strong pace of hiring in November, but there are fears that the Omicron variant could hurt demand for services as well as keep the unemployed at home, and hold back job growth in the months ahead.
Private payrolls increased by 534,000 jobs last month after rising 570,000 in October, the ADP National Employment Report showed on Wednesday. Economists polled by Reuters had forecast private payrolls would increase by 525,000 jobs.
"We do expect payroll growth to ease back soon as, regardless of what happens with the Omicron coronavirus variant, rising Delta infection rates in the Northeast and Midwest begin to weigh on demand a little," said Paul Ashworth, chief economist at Capital Economics in New York.
The broad-based gains in hiring were led by the leisure and hospitality industry, where payrolls rose by 136,000 jobs. Manufacturing added 50,000 jobs and construction payrolls increased by 52,000 positions.
The ADP report is jointly developed with Moody's Analytics and was published ahead of the Labor Department's more comprehensive, and closely watched, employment report for November on Friday. It has, however, a poor record predicting the private payrolls count in the department's Bureau of Labor Statistics employment report because of methodology differences.
Economists expect job gains increased further in November. First-time applications for unemployment benefits declined between mid-October and mid-November. The Conference Board's labor market differential - derived from data on consumers' views on whether jobs are plentiful or hard to get - jumped to a record high in November.
But a shortage of workers caused by the COVID-19 pandemic is hindering faster job growth. There were 10.4 million job openings at the end of September. Workers have remained home even as companies have been boosting wages, school reopened for in-person learning and generous federal government-funded benefits ended.
"Overall, the risk remains that renewed health concerns will keep workers, especially those with caregiving responsibilities, from returning to the labor force, preventing a return to pre-pandemic strength," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
According to a Reuters survey of economists, private payrolls likely increased by 530,000 jobs in November. With government hiring anticipated to have rebounded by 20,000, that would lead to overall payrolls rising by 550,000 jobs.
The economy created 531,000 jobs in October.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: firstname.lastname@example.org))