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* Private payrolls drop 301,000 in January
* Omicron blamed for broad decline in payrolls
By Lucia Mutikani
WASHINGTON, Feb 2 (Reuters) – U.S. private payrolls fell for the first time in a year in January as soaring COVID-19 infections disrupted business operations, raising the risk of a sharp decline in employment that would deal a temporary setback to the labor market.
The surprise drop in payrolls in the ADP National Employment report on Wednesday was across all industries and business sizes. It added to a slowdown in manufacturing activity last month in suggesting that the economy lost significant momentum at the start of 2022 as coronavirus cases, driven by the Omicron variant, raged across the nation.
“The good news is that the job market should quickly bounce back as the Omicron variant fades,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
“Underlying demand in the economy is still strong, and businesses are still trying to hire. But the January drop in employment is another reminder that the economy will not fully return to normal until the pandemic is over.”
Private payrolls decreased by 301,000 jobs last month, the first drop since December 2020, after increasing by 776,000 in December. Economists polled by Reuters had forecast private payrolls would increase by 207,000 jobs.
The broad decline in private payrolls was led by the leisure and hospitality sector, with 154,000 job losses. Trade,…
