(Bloomberg) — Employment at U.S. companies declined in January by the most since the early days of the pandemic as the omicron variant of the coronavirus registered a swift yet likely temporary blow to the nation’s labor market.

Businesses’ payrolls fell by last month in a broad-based decline, according to ADP Research Institute data released Wednesday. According to a Bloomberg poll of economists, the median estimate was for a rise of 180,000.

Due to an increase in Covid-19-related infections, some businesses closed and other activities were restricted, the employment market is tightening. Capacity constraints are being exacerbated by a near record number of vacant positions and higher employee turnover. As the omicron variety is less popular, however, it’s still seen that employment growth continues to rise.

U.S. stock options lost ground following this data. However, 10-year Treasury yields were slightly higher. 

The data precede Friday’s monthly employment report from the Labor Department, which is currently forecast to show that private payrolls increased by 113,000 in January. The ADP figures don’t always follow the same pattern as the Labor Department’s data.

Broad-Based Decline

The January drop in employment as a service provider was 274,000, which is the most significant since April 2020. It was led by hospitality and leisure. Also, trade and transportation saw a significant decline. 

The decline in construction and manufacturing led to a 27,000 decrease in the number of employees at good producers.

“The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth,” Nela Richardson, ADP’s chief economist, said in a statement.

Companies with less than 50 employees saw their payrolls drop by 144,000, while larger businesses lost 98,000.

ADP’s payroll data represent firms employing nearly 26 million workers in the U.S.

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