By Lucia Mutikani

WASHINGTON (Reuters] – The U.S.’s job growth likely slowed in January due to COVID-19-related infections. These viruses disrupted activity at high contact businesses, a temporary setback in the labor market recovery, which was already reversing by the end of the month.

It is possible that there were even more job losses last month because of low-paid workers in healthcare, leisure, and hospitality who are not entitled to sick leave.

On Friday, the Labor Department will release its carefully watched employment report. White House officials and economists have cautioned against reading too much in the report. It will include annual revisions to establishments data as well as new population controls for household surveys. Federal Reserve officials are likely to ignore the report, as they are set to raise interest rates in the next month.

“The temporary downturn in the labor force and loss of jobs is only temporary. Fed officials must remember the inflation threat,” stated Christopher Rupkey chief economist.

FWDBONDS New York No matter how low the January employment report was, no central banker of any stature will think the economy is in trouble.

According to Reuters economist polls, the survey of establishments will show that nonfarm payrolls rose by 150,000 in January after increasing by 199,000 in December.

The slowdown is partly due to ongoing difficulties finding workers. There were 10.9 million jobs available at December’s end.

There are varying estimates, ranging from a drop of 400,000 up to an increase of 385,000. This would mark the first decline in payrolls since December 2020.

In mid-January the Census Bureau released its Household Pulse Survey. It found that 8.8 Million people said they were unable to go to work between Dec. 29th, and Jan. 10, due coronavirus related reasons. The survey of small business owners also revealed an increase in the number reporting severe negative effects from the pandemic. It was conducted between Jan. 10-16.

Mid-January was when Omicron infected were at their peak. Workers out of work or quarantine who do not receive payment during the payroll survey are considered unemployed.

Latest government data shows that paid sick leaves were available for 79% civilian workers as of March 2021.

The problems in the labor market and economy at the beginning are almost over. According to the government, first applications for unemployment benefits fell for the second consecutive week on Thursday. The decline is further away from mid-January’s high of three months.

A Reuters analysis shows that the United States reports an average of 385 875 COVID-19 infection per day. That’s a sharp drop from mid-January when it was more than 700,000.

Brad McMillan from Commonwealth Financial Network Waltham, Massachusetts, said that “as the medical condition changes, so will employment impact.” The January Jobs Report will provide another example of why you should not respond to the immediate news and instead look at the underlying data. This is how better investors can be.

NOISY REPORT

The uncertainty around the payrolls numbers is compounded by the fact that January’s actual employment falls right after holiday hiring. To remove seasonal variations from data, the government uses a model that adds about 3,000,000 jobs to create the adjusted seasonally.

Last August, the government reported that 166,000 jobs were created in December 2021 less than originally estimated. The January number could be affected by this.

“If less than usual layoffs happen in some industries this calendar year, perhaps reflecting the fact that there is already a lower level of employment than expected due to shortages of workers, adjusted figures will show a substantial increase,” stated Veronica Clark, an economist at Citigroup New York (NYSE:).

The ADP National Employment Report, which revealed that private payrolls fell in January for only the second time this year, highlighted a weak number in payrolls.

White House officials are working tirelessly to get the country ready for disappointing payrolls numbers, and several have offered a glimpse of what the report will look like.

A survey of household members, which is used to calculate the unemployment rate, may give a more accurate picture of the market. The survey counts all people with a job regardless of how much they received during the week. It also includes those who were absent for vacations, illness, labor-management dispute, personal reasons, and other factors.

Forecast unemployment remains at 3.9%. This is a sign of tightening labor markets. The series will be affected by new population assumptions. The January jobless rate, and other household survey ratios are not comparable with December.

Omicron’s rise keeping workers home likely meant that the labor pool remained low. This is about 2.2 Million jobs less than it was before the pandemic.

Low-paying, hourly work likely drove wage growth. The average hourly wage is expected to rise 0.5% from December’s 4.7%, which will increase the annual growth rate to 5.2%. The economists forecast an increase of overtime as workers compensate for the absences of their colleagues.