Restaurants and hotels hired the most of any industry in December, leaving economists hoping for ‘limited labor market damage’ from Omicron

• December was another dismal month for employment following November’s smaller-than-expected gains.
• Leisure and hospitality saw the most gains in December with 53,000.
• Retail lost jobs, with a decline of 2,100 between November and December.

Leisure and hospitality saw the most gains in December as part of another dismal jobs report out today. 

After a revised gain of just 249,000 in November, the US saw a smaller gain of just 199,000 nonfarm payrolls in December. 

“The new year is off to a rocky start,” Nick Bunker, director of research at Indeed Hiring Lab, wrote in a statement about today’s release. “These less than stellar numbers were recorded before the omicron variant started to spread significantly in the United States. Hopefully the current wave of the pandemic will lead to limited labor market damage.”

Restaurants and hotels saw the largest number of jobs added in December. With a gain of 53,000 in leisure and hospitality, that’s a slightly better gain than the 41,000 jobs added a month before.  Food services and drinking places added 42,600 jobs.

Professional and business services followed behind leisure and hospitality with a gain of 43,000. Overall, this industry is just below where it was before the pandemic as of December, just 0.16% below February 2020 employment. 

The following chart shows what job gains and losses looked like in different industries:

Leisure and hospitality is still trying to recover from being hard hit by the pandemic. Employment is 1.2 million, or 7.2%, below where it stood in February 2020 right before the pandemic.

"While it's good to see that most of the job gains are tilted towards leisure and hospitality, the level of gains is still concerning," Bunker told Insider. It's around 53,000 in a month and a few months ago back in October, we were seeing in the vicinity of 200,000."

Bunker added that given "this sector is so sensitive to spikes in cases, or at least it has been in the past. Now we will have to see what happens in the January data with the Omicron surge."

The holiday season didn't see a large gain in retail employment. 

In fact, unlike many of the other industries, retail trade saw a slight drop in employment of around 2,000. In particular, clothing and clothing accessories stores saw a loss of 8,000 and sporting goods, hobby, book, and music stores saw a decline of about 13,000. General merchandise stores within retail trade, however, saw a gain of about 16,000.

Bunker said the "shift in how people did their holiday shopping" could be contributing to this number, with people completing their holiday shopping online given pandemic or supply chain concerns. It could also be due to seasonal adjustments in the data, he added. 

Although overall there were only 199,000 jobs added in December, the household survey shows an employment gain of 651,000 that month. 

"I think my broad takeaway from this is that while the two surveys disagree a bit, they are sending the same signal that the labor market continues to recover and that we're getting closer and closer to recovery," Bunker said. "It's just, they are disagreeing in part on how quickly we're getting there."