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Private Jobs Post Strong Growth: ADP

Source: WSJ

Posted on 30 Nov 2011

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Private-business hiring jumped in November, according to a report released Wednesday.

Separately, the productivity of U.S. workers in the third quarter was less than initially reported, reinforcing the view that economic growth in that period wasn't as robust as first thought.

Private-sector jobs in the U.S. rose by 206,000, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.

Economists surveyed by Dow Jones Newswires expected ADP would report an increase of 130,000. The October data were revised to show a rise of 130,000 versus 110,000 reported earlier.

The increase in November was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply," the report said.

The ADP survey counts only private-sector jobs, while the Bureau of Labor Statistics' nonfarm payroll data, to be released Friday, include government workers.

Economists surveyed by Dow Jones Newswires expect total nonfarm payrolls rose by 125,000 slots in November, better than the 80,000 jobs added in October.

The extra-large jump in the ADP measure may cause some economists to raise their forecast for Friday's payrolls figures. The November unemployment rate is expected to remain at 9.0%.

A report released Tuesday showed consumers are slightly more upbeat about the November labor markets. The Conference Board's consumer confidence survey showed 41.1% of respondents consider jobs "hard to get" this month, down from 46.9% thinking that in October.

The latest ADP report showed large businesses with 500 employees or more added 12,000 employees to their staffs, while medium-size businesses added 84,000 workers in November and small businesses that employ fewer than 50 workers hired 110,000 new workers.
Service-sector jobs increased by 178,000 this month, and factory jobs increased 7,000.

ADP, of Roseland, N.J., said it processes payments of one in six U.S. workers. Macroeconomic Advisers, based in St. Louis, is an economic-consulting firm.

Other job-related reports Wednesday weren't as upbeat about the labor market.

TrimTabs estimated only 64,000 new jobs were created in November. The report said, "It appears that hiring managers have rolled up the welcome mat due to the raging debt crisis in Europe."

In addition, layoff announcements this month were virtually unchanged from October's level. Outplacement firm Challenger, Gray & Christmas said the number of planned job cuts announced by U.S.-based employers fell 0.7% to 42,474 in November.

Productivity Revised Down

Nonfarm business productivity grew 2.3% in July through September, revised down from the previously estimated gain of 3.1%, the Labor Department said Wednesday. Productivity, the output per hour of all workers, fell 0.1% in the second quarter.

The revision was caused by a downward adjustment to total output combined with a slight upward revision in the amount of hours worked.

Last week, the government scaled back its view of third-quarter economic growth, lowering its measure of gross domestic product to a 2.0% gain from an advanced estimate of +2.5%. Since emerging from recession, the U.S. economy has experienced only tepid growth, held back by high unemployment and a listless housing market.

The Federal Reserve has projected the economy to grow in the range of 2.5% to 2.9% in 2012, while forecasting the unemployment rate to remain above 8.5% through next year. The central bank is considering taking additional steps to stimulate the economy in an effort to bolster employment.

The declining cost of labor seen in the third quarter could also be a boon. As labor cost decline it makes it cheaper for employers to add to their payrolls. Declining labor cost also helps keep inflation in check.

Unit labor costs declined at a 2.5% annual rate in the third quarter, revised down from an originally reported decrease of 2.4%. Economists had expected the revised data would show a 2.2% decrease. Second-quarter costs were down 0.1%, revised down significantly according to the new data.

With high unemployment, which is expected to remain at 9.0% for November when reported Friday, workers are in a weak position to demand higher salaries, allowing companies to keep labor cost down.

Wednesday's report showed nonfarm business output rose by 3.2% in the third quarter, down from the initially reported 3.8% gain.

Hours worked increased by 0.8% during July through September, up from an initial measure of 0.6%.

Manufacturing productivity showed a 5.0% gain in the third quarter after reporting a 2.2% decline in the second quarter.