It’s a good news/bad news situation in the preliminary reports for unemployment in November. The markets rose on an indicator of private-sector growth from ADP, the large payroll firm, which estimated an increase of 93,000 jobs last month:
Private-sector employment increased by 93,000 from October to November on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from September to October was revised up from the previously reported increase of 43,000 to an increase of 82,000.
This month’s ADP National Employment Report shows an acceleration of employment and suggests the nation’s employment situation is brightening somewhat. November’s gain in private-sector employment is the largest in three years. This is the tenth consecutive month of gains, which have averaged 47,000 during that period. Nevertheless, employment gains of this magnitude are not sufficient to lower the unemployment rate, which likely will remain above 9% for all of 2011. Furthermore, given modest GDP growth in the second and third quarters, and the usual lag of employment behind GDP, it would not be surprising to see several more months of only moderate gains in employment even as the economic recovery gathers momentum.
According to the ADP Report, employment in the service-providing sector rose by 79,000 in November, the tenth consecutive monthly gain. Employment in the goods-producing sector rose by 14,000, the first monthly increase since March 2007. Construction employment dropped by 3,000 during November, the smallest decline since June 2007, and manufacturing employment increased by 16,000.
ADP must have revised its August-to-September report, which was initially announced as a loss of 39,000 jobs. This is the strongest report from ADP in the last two years, but remains the moderate range. ADP tends to underestimate overall private-sector job growth each month, which means that the number tomorrow seems likely to be somewhat larger than 93K. It needs to be over 100K each month just to keep pace with population growth. Last month’s +159,000 report was only the second month to exceed that mark, and that was on a +83,000 result from ADP’s survey.
Initial jobless claims went the wrong direction last week, though:
In the week ending Nov. 27, the advance figure for seasonally adjusted initial claims was 436,000, an increase of 26,000 from the previous week’s revised figure of 410,000. The 4-week moving average was 431,000, a decrease of 5,750 from the previous week’s revised average of 436,750.
The advance seasonally adjusted insured unemployment rate was 3.4 percent for the week ending Nov. 20, unchanged from the prior week’s revised rate of 3.4 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Nov. 20 was 4,270,000, an increase of 53,000 from the preceding week’s revised level of 4,217,000. The 4-week moving average was 4,288,500, a decrease of 29,250 from the preceding week’s revised average of 4,317,750.
Last week’s numbers came in the middle of a holiday week, when claims usually drop lower anyway and more guesswork is involved. The level this week of 436,000 is still an improvement over the rest of the year, where the range has been consistent between 445K – 500K. It’s still far above the level indicating significant job creation, usually at the 300K – 325K range. And having the weekly numbers go up in the middle of the busiest retail season may indicate that this Christmas won’t be as good for employment as is usually the case.
These indicators suggest a status-quo report tomorrow keeping the jobless rate at the current 9.6%, or perhaps just a tenth of a point lower. The big question will be whether the long-term unemployed and discouraged workers have begun looking for jobs again.