On Friday, the Bureau of Labor Statistics will release the jobs report for November, which will almost certainly show a significant impact from Hurricane Sandy in the northeast. The ADP report on private-sector employment shows only a stagnation-level gain, but in part that comes because of the “havoc” wreaked by “Superstorm Sandy,” according to economist Mark Zandi at ADP partner Moody’s Analytics. Otherwise, we would have seen an increase of nearly 200,000:
Private sector employment increased by 118,000 jobs from October to November, according to the November ADP National Employment Report®, which is produced by Automatic Data Processing, Inc. (ADP®), a leading provider of human capital management solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. The October 2012 report, which reported job gains of 158,000, was revised down by 1,000 to 157,000 jobs. …
Mark Zandi, chief economist of Moody’s Analytics, said, “Superstorm Sandy wreaked havoc on the job market in November, slicing an estimated 86,000 jobs from payrolls. The manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm. Abstracting from the storm, the job market turned in a good performance during the month. This is especially impressive given the uncertainty created by the Presidential election and the fast-approaching fiscal cliff. Businesses appear to be holding firm on their hiring and firing decisions.”
Most of the hiring growth came from large businesses, according to ADP’s analysis. More than half came from companies of 1,000 or more employees; only 13,000 came from businesses under 20 employees. That shows a lack of innovation in the job-creation market, and perhaps a move of investors to assume low-risk positions by directing capital into proven markets rather than emerging ones.
Manufacturing took a pretty big hit in November. The sector lost 16,000 jobs, although ADP reports that goods-producing employment rose by 4,000 jobs, thanks to a boost in construction.
Still, ADP tends to report higher numbers than the BLS, although they have recently adjusted their calculations in order to hew more closely to the government trends. Economists predicted a better number, CNBC reports:
The private sector created 118,000 jobs in November, primarily thanks to service-related jobs, a number that missed expectations ahead of Friday’s closely watched government report.
Economists had expected the report to show 125,000 total private jobs created as the effects linger from Superstorm Sandy and anxiety over the “fiscal cliff” negotiations in Washington.
ADP said the service sector created 114,000 new positions, while goods-producing businesses accounted for the balance of 4,000 jobs. Gains of 23,000 construction jobs offset a loss of 16,000 in manufacturing.
The report is often used as a precursor to the monthly nonfarms payroll report, which the government will release Friday. The economy is expected to have created 80,000 new jobs in November, with the unemployment rate likely to hold steady at 7.9 percent.
Assuming that ADP comes close to the BLS number, this is yet another month of stagnant growth, barely avoiding falling behind in relation to population growth. We need to add 125,000 jobs a month just to stay in place; 80K is entirely inadequate. We’ll know a little more tomorrow about what to expect on Friday when we see the weekly jobless claim report, which should be showing a little more decline as the Hurricane Sandy effect wears off, but I wouldn’t expect anything spectacular.