Good morning. Jeff Sparshott here with the latest on the economy. You can send questions, comments and suggestions by replying to this email.

Workers quit their jobs at a record rate in November while job openings stayed close to highest-ever levels, signs the U.S. labor market remained tight late last year. The Labor Department on Tuesday said the total number of quits reached 4.5 million last month, the highest level in data reaching back to 2000. The quits rate—the share of workers who voluntarily left a job—was 3%, up from 2.8% the prior month and matching the record last seen in September. The Labor Department figures lag behind private-sector data by about a month and don’t reflect any impact from the surge of the Omicron variant of Covid-19, which started building in December and is creating disruptions in parts of the economy, Bryan Mena reports.

Workers have been quitting their jobs for higher wages, more flexibility or better opportunities elsewhere, economists say. The Beveridge Curve (named for British economist William Beveridge) illustrates the relationship between job openings and unemployment. Data from the latest recession and rebound show a big outward shift, suggesting a sizable disconnect between employers and potential employees. "While the openings and unemployment rates are converging toward the pre-pandemic Beveridge curve, the likely intersection with that curve is at an off-the-charts level of labor market tightness," said Tim Duy, chief U.S. economist at SGH Macro Advisors.

ADP's employment report is expected to show that the U.S. private sector added 375,000 jobs in December. (8:15 a.m. ET)

IHS Markit's U.S. services index for December is expected to tick down to 57.3 from a preliminary reading of 57.5. (9:45 a.m. ET)

The Federal Reserve releases minutes from its Dec. 14-15 meeting at 2 p.m. ET.

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American manufacturers ran a wee bit less hot last month. How that happened is what matters. On Tuesday the Institute for Supply Management said that its index of manufacturing activity slipped to 58.7 in December from 61.1 in November. Anything over 50 counts as an expansion in activity. Last month was when the Omicron wave of Covid-19 began to hit, but the manufacturing report didn’t offer any indication that it was the factor slowing factories down. What it suggested instead was that supply-chain problems are easing and that demand is beginning to be more easily met, Justin Lahart writes.

A big part of why the manufacturing index slipped was that one of its component indexes, measuring supplier delivery times, slipped to 64.9 in December from 72.2 in November. Speedier delivery times are usually an indication that demand is slowing down, but with all the bottlenecks manufacturers have been facing, this probably comes as more of a relief than anything else.

Toyota Motor has for the first time overtaken General Motors as the U.S.’s top-selling car company by annual sales, a change prompted largely by a global computer-chip shortage that dealt an uneven blow to the car business. The Japanese auto maker, which for decades has worked to expand its presence in the U.S., outsold GM by roughly 114,000 vehicles in 2021, Mike Colias and Christina Rogers report.

More than one million new Covid-19 infections were reported in the U.S., a sign of the rapid spread of the Omicron variant that public-health experts said is only partially captured by official data. The U.S. reported a record 1.08 million Covid-19 infections on Monday as most states worked to clear backlogs after pausing during the New Year’s holiday. The reports pushed the seven-day average of daily reported infections to 480,273, nearly double the peak reached at the height of last winter’s case surge, Anthony DeBarros and Rhiannon Hoyle report.

OPEC and a coalition of Russia-led oil producers agreed to continue pumping more crude, betting that the Omicron variant of Covid-19 won’t have the sort of devastating effect on demand as previous waves of the virus. The group agreed last year to boost output each month until production reaches pre-pandemic levels, but reviews that policy every month. Oil prices surged after initially shrugging off the news, Summer Said and Benoit Faucon report.

China’s economic pushback against the European Union over Lithuania’s outreach to Taiwan has sparked divisions in the EU and raised fresh doubts about its ability to shield its giant market from Beijing’s pressure. China in recent weeks has effectively blocked Lithuanian firms from its market and started pressing European and U.S. firms with Lithuanian suppliers to cut those ties or risk being frozen out, according to U.S. and European officials. The Chinese pressure came after Taiwan in November opened a representative office under the island’s name in Lithuania’s capital, a move Beijing called an “egregious precedent” and vowed to retaliate. China’s economic measures show Beijing remains able to sidestep growing EU moves to defend its market from China’s economic behavior, Laurence Norman reports.

A week and a half into one of the biggest pandemic lockdowns in China, residents of Xi’an voiced desperation online about challenges in getting food and medical care. China’s Covid-19 count remains low in comparison with other countries, hovering at around 100 a day. In the past few days, about 90% of cases have been in Xi’an. Like in Wuhan in early 2020, no one is allowed to enter or leave the city. Most of Xi’an’s 13 million residents can leave their homes only for Covid-19 testing. Few vehicles are allowed in the streets, and many supermarkets and hospitals are closed. The online complaints of tens of thousands of stranded residents show how local officials must weigh the costs of extreme restrictions against the benefit of keeping the case count low, in what Beijing calls a zero-tolerance Covid-19 strategy, Liyan Qi reports.

Real Time Economics comes to you from WSJ economics reporters and editors around the world. Today's issue was curated and edited by Jeff Sparshott (@jeffsparshott) in Manila, James Hookway (@JamesHookway) in London, and Greg Ip (@greg_ip) in Washington, D.C.

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