Omicron's attack on jobs severe

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the economic bite by Omicron might be much worse that feared, even as recently as yesterday.</p><p>Yesterday's warning on what this weekend's US non-farm payrolls report may have been a timely one. Today, the precursor <a href="https://adpemploymentreport.com/2022/January/NER/NER-January-2022.aspx" target="_blank"><strong>ADP employment report</strong></a> said US payrolls fell in their system by -300,000 in January on the Omicron impact. (A gain of +200,000 was expected.) The main cutbacks (half) were in the hospitality and leisure industries. Most other industries cut back too, although not all. But half the rest were declines in the logistics sector, vulnerable to the pandemic because they seems reluctant to accept the mask mandate. They are paying the price. The estimated +150,000 January gain in non-farm payrolls now looks far, far too optimistic.</p><p>This news caused risk aversion in the bond market. But the equity markets are still more focused on very good earnings reports coming through.</p><p>Going the other way, there was a <a href="https://www.mba.org/2022-press-releases/february/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>surge in mortgage applications</strong></a> last week in the US. That is despite US <a href="http://www.freddiemac.com/pmms/" target="_blank"><strong>mortgage interest rates</strong></a> rising to two year highs.</p><p>Meanwhile, their <a href="https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opds122021.pdf" target="_blank"><strong>total gross level of public debt</strong></a> hit US$30 tln as at the end of January, although $6.5 tln of that is owed to other Federal agencies, so the amount owed to the public is $23.5 tln, about 100% of current US annual GDP. Of that, less than $6 tln (a qua