More private sector jobs than expected were created in the U.S. last month. However, it was barely enough to ward off the doomsayers predicting a double-dip recession.
Payroll processor and HR services company ADP, and its partner, Macroeconomic Advisers, said 110,000 jobs were added to the U.S. economy in October. That was more than the 100,000 average expected by economists. The monthly report released this morning also revised to 116,000 the number of new jobs added in September. Originally, ADP reported 91,000 jobs were created.
The report helped move stocks into positive territory today, after two days of global meltdown over the Greek decision to send its bailout plan to a referendum. It also offered more evidence that the U.S. may not be headed into another downturn, even if the recovery is sluggish.
“The good news is that employment growth appears stable, but the bad news is that gains of 100,000 or slightly less a month won’t be sufficient to reduce the unemployment rate or generate a pickup in income growth,” wrote Paul Ashworth, chief U.S. economist with Capital Economics, in a research note quoted by MarketWatch.
In another report, global outplacement firm Challenger, Gray & Christmas said “the number of planned job cuts announced by U.S.-based employers plunged in October to 42,759, the lowest monthly total since June.” So far this year 521,823 job cuts have been announced, almost 90,000 more than last year at this point, but still half of what it was in 2009.
The ADP report offers some hints at what might be ahead when the U.S. Labor Department releases the official labor report on Friday. The official numbers include all non-farm payrolls, while ADP counts only the private sector. Cuts by state and local governments have been offsetting some of the monthly job gains for months.
Surveys of economists show the average of new jobs expected in Friday’s report range from MarketWatch’s 90,000 to Bloomberg’s 125,000. Even the higher prediction isn’t enough to make a dent in unemployment, which is expected to remain at 9.1 percent.
Most of the gains in the ADP report came from the service sector, which added 114,000 jobs in October. Manufacturing was the big loser, shedding 8,000 jobs. Small- and medium-sized employers , those with payrolls of up to 499 workers, are responsible for most of the job creation. The two groups added 111,000 workers. Larger employers had a net loss of 2,000 workers.
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K.C. Donovan Nov 3, 2011 at 12:34 pm
I read recently about a report issued by a respected Hedge Fund Research firm that for job creation to exceed net new workers entering the workforce that the Economy needs to ramp up to a 5% GDP Growth. Interestingly, they put 5% growth at about $750B needed to be injected into the economy to make this happen…without a new Technology (Personal Computer, Internet, etc.) ramping up on the horizon – doesn’t seem as if we’ll see 5% GDP Growth anytime soon…
(FYI – if you’re a Keynesian and support Govt injection of cash – the current Jobs Bill going down to defeat only was to inject $450B – not nearly enough if you buy into the 5% number…)
We probably need to get used to the sluggish economy – it could be our friend for a long time to come…
Unemployment Edges Down, But Job Growth Is Short of Estimates - ERE.net Nov 4, 2011 at 9:29 am
[...] Economists were expecting at least 100,000 new jobs to have been created last month. Instead, the numbers show only 80,000 new non-farm jobs, all of them coming from the private sector. Government at every level cut a total of 24,000 positions, continuing a trend that began mid-2008 at the state and local levels. [...]