Wells Fargo: -100K Nonfarms On Omicron Wave

Going into this week (ie even prior to the weak ADP release), Wells Fargo saw a decline of 100k in January nonfarm payrolls, toward the bottom end of expectations.

• "The Omicron wave looks to have slowed hiring markedly... Aside from causing a surge in worker absenteeism due to illness, the hiring process was likely significantly derailed by the wave of new infections, which reached a peak during the survey week. On the other hand, employers' reluctance to part ways with seasonal workers amid increasingly dire shortages of labor might help offset the drag from the sharp acceleration in case counts."
• They see unemployment steady at 3.9% but "note that new population controls for the household survey will be released with January's report, which could add extra noise to the household numbers".
• That being said, they see the weakness in this report as likely to prove temporary, pointing to other strong labor market metrics elsewhere (including a follow-up note on this week's JOLTS numbers).