November 2010 private sector non-farm payrolls rose 93,000 – the largest increase so far this year. The headlines:
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.
As always, there is also some bad news in the data. Historically (except for 2008), there has been a jump in employment coming into Christmas. The graph below shows the month-over-month (MoM) gains in employment for all years except 2008.
The MoM improvement in 2010 is only 11,000 – while the recent historical numbers normally fall between 70,000 and 100,000. You should also note that historically December’s employment gains are less good than November’s.
ADP’s release is issued coincident with the November 2010 press release from global outplacement firm Challenger, Gray & Christmas, Inc. The importance of the Challenger release is that it offers a picture into the corporate world showing whether layoffs are ongoing. Their headline:
The pace of downsizing surged to its highest level in eight months, as employers announced plans to reduce payrolls by 48,711 jobs in November, according to the report released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc.
November job cuts were 28 percent higher than the 37,986 planned layoffs reported in October. It was the highest job-cut total since March, when employers announced plans to cut 67,611.
Despite the increase, job cuts this year are still well below last year’s levels. Last month’s total was 3.3 percent lower than the 50,349 job cuts announced in November 2009. Overall, employers announced 497,969 job cuts from January through November, a 60 percent decline from the 1,242,936 layoffs in the same period a year ago.
Leading the November job-cut surge was the government and non-profit sector, which announced 10,761 layoffs during the month. This marks the seventh time this year that the sector was the largest job cutter. Government and non-profit agencies have cut 138,979 jobs this year, 177 percent more than the second-ranked pharmaceutical industry, which has announced 50,168 job cuts to date.
“Government and non-profit job cuts are down 16 percent from a year ago, but that is probably little consolation to employees in the sector, which is still struggling despite signs of recovery in other areas of the economy. Unfortunately, 2011 may not offer much respite for workers in the sector as many newly elected members of Congress are pushing for significant federal spending cuts. Job cuts that have been concentrated at the state and local level could expand to include federal workers in the new year,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
“Other sectors have seen significant declines in job cuts this year and, at the moment, there is little evidence of a possible resurgence in 2011. The November increase in job cuts is not indicative of a broader trend. Historically, job cuts tend to increase in the final months of the year. This is the period when many companies make budget and payroll decisions for the coming year,” said Challenger.
The November surge in job cuts was somewhat offset by hiring announcements totaling 26,012. Hiring was led by retailers, who reported plans to add 15,900 seasonal workers last month. In October, retailers announced plans to hire 66,000 seasonal workers. Transportation companies added 50,300 seasonal workers in October to help meet increased shipping demands over the holidays, but added only 500 additional workers in November.
Taking ADP and Challenger together, the job market improvements this month are hollow. While the employment picture is significantly better than a year ago – the jobs gain this month were not enough. Add to this the growing government employment layoffs, the ensuing months may bring less improvement then the analysts hope.
We await the wacky and noisy BLS jobs data which will be released later this week.
ADP Sees Job Growth in October, Low Job Losses from Challenger by Steven Hansen