Weak US private sector employment clouds recovery outlook
Posted: 02 December 2009 2258 hrs
A man at a job search centre in California
WASHINGTON - The US private sector shed jobs at a slower pace for the eighth consecutive month in November as the economy emerges from recession, and the drop was sharper than expected, ADP data showed Wednesday.
Payrolls firm ADP said the nonfarm sector lost 169,000 jobs last month, 26,000 fewer than in October.
The reading was worse than the 150,000 job losses expected by most analysts as businesses struggled amid stubbornly tight credit conditions and worries about the strength of the nascent recovery.
The ADP report came a day before President Barack Obama hosts a high-profile "jobs forum" at the White House to tackle elevated unemployment that threatens to derail the recovery.
"Although overall economic activity is stabilizing, employment usually trails economic activity, so it is likely to decline for at least a few more months," ADP said.
The ADP report, based on private firms' payroll data, offers a clue to the momentum of the labour market. It came ahead of the government's weekly initial jobless claims report Thursday and the monthly labour data Friday that includes the government sector.
Most analysts expect the November unemployment rate held steady at 10.2 percent -- a 26-year high -- and the economy shed 120,000 nonfarm jobs, down from 190,000 in October.
The ADP report highlighted the steep hurdles to economic recovery as consumers curb spending, which drives two-thirds of output, amid job insecurity and losses in home values and investment portfolios.
"With the labour market improving slowly, the strength and durability of the recovery remain uncertain," said Ryan Sweet of Moody's Economy.com.
"Though layoffs are moderating, small businesses are still not adding jobs on net as they struggle to obtain credit," he added, noting that small firms had accounted for a large share of job growth in the past two recoveries.
Ian Shepherdson, chief US economist at High Frequency Economics, said that despite the improvement in the job picture at small businesses, "they will be very slow to start hiring again."
According to ADP, the vast US services sector, representing more than 85 percent of nonfarm employment, shed 81,000 jobs in November, up a tick from 79,000.
By contrast, job losses in the goods-producing sector dropped to 88,000 from 116,000 in October, with employment in the manufacturing sector falling 44,000, the smallest decline since May 2008, the ADP noted.
In a separate report, outplacement firm Challenger, Gray & Christmas said that employers planned job cuts in November fell 9.6 percent from October to 50,349, the fewest number since December 2007, when the US economy officially entered recession.
"Most industries are seeing job cuts subside. Barring any unexpected shocks to the economy, we appear to be coming out of the woods when it comes to downsizing. Unfortunately, the second half of the job market equation -- hiring -- has not shown any signs of an imminent rebound," said chief executive John Challenger.
On Thursday Obama will gather business leaders, including Google chief executive Eric Schmidt and Walt Disney CEO Bob Iger, Nobel economics laureates Joseph Stiglitz and Paul Krugman and labour chiefs to the White House to discuss job creation.
The administration argues that a 787-billion-dollar economic stimulus plan passed in February has likely saved or created a million jobs, and prevented an even worse unemployment crisis.
But Republicans allege the White House is massaging the figures and has done more to safeguard federal government jobs rather than create new ones in the private sector.
Posted: 02 December 2009 2258 hrs
A man at a job search centre in California
WASHINGTON - The US private sector shed jobs at a slower pace for the eighth consecutive month in November as the economy emerges from recession, and the drop was sharper than expected, ADP data showed Wednesday.
Payrolls firm ADP said the nonfarm sector lost 169,000 jobs last month, 26,000 fewer than in October.
The reading was worse than the 150,000 job losses expected by most analysts as businesses struggled amid stubbornly tight credit conditions and worries about the strength of the nascent recovery.
The ADP report came a day before President Barack Obama hosts a high-profile "jobs forum" at the White House to tackle elevated unemployment that threatens to derail the recovery.
"Although overall economic activity is stabilizing, employment usually trails economic activity, so it is likely to decline for at least a few more months," ADP said.
The ADP report, based on private firms' payroll data, offers a clue to the momentum of the labour market. It came ahead of the government's weekly initial jobless claims report Thursday and the monthly labour data Friday that includes the government sector.
Most analysts expect the November unemployment rate held steady at 10.2 percent -- a 26-year high -- and the economy shed 120,000 nonfarm jobs, down from 190,000 in October.
The ADP report highlighted the steep hurdles to economic recovery as consumers curb spending, which drives two-thirds of output, amid job insecurity and losses in home values and investment portfolios.
"With the labour market improving slowly, the strength and durability of the recovery remain uncertain," said Ryan Sweet of Moody's Economy.com.
"Though layoffs are moderating, small businesses are still not adding jobs on net as they struggle to obtain credit," he added, noting that small firms had accounted for a large share of job growth in the past two recoveries.
Ian Shepherdson, chief US economist at High Frequency Economics, said that despite the improvement in the job picture at small businesses, "they will be very slow to start hiring again."
According to ADP, the vast US services sector, representing more than 85 percent of nonfarm employment, shed 81,000 jobs in November, up a tick from 79,000.
By contrast, job losses in the goods-producing sector dropped to 88,000 from 116,000 in October, with employment in the manufacturing sector falling 44,000, the smallest decline since May 2008, the ADP noted.
In a separate report, outplacement firm Challenger, Gray & Christmas said that employers planned job cuts in November fell 9.6 percent from October to 50,349, the fewest number since December 2007, when the US economy officially entered recession.
"Most industries are seeing job cuts subside. Barring any unexpected shocks to the economy, we appear to be coming out of the woods when it comes to downsizing. Unfortunately, the second half of the job market equation -- hiring -- has not shown any signs of an imminent rebound," said chief executive John Challenger.
On Thursday Obama will gather business leaders, including Google chief executive Eric Schmidt and Walt Disney CEO Bob Iger, Nobel economics laureates Joseph Stiglitz and Paul Krugman and labour chiefs to the White House to discuss job creation.
The administration argues that a 787-billion-dollar economic stimulus plan passed in February has likely saved or created a million jobs, and prevented an even worse unemployment crisis.
But Republicans allege the White House is massaging the figures and has done more to safeguard federal government jobs rather than create new ones in the private sector.
