More Economic Churn: Challenger Announces "Surge" In Planned Job Cuts As Noisy ADP Private Payroll Beats Expectations
Another day, another set of completely contradictory economic numbers. First, in an earlier release Challenger announced that employers planned on firing 48,711 people in November compared to 37,986 in October, led by a "surge" in the non-profit sector where 10,761 layoffs were pending. "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," John A. Challenger, chief executive officer of Challenger,
Gray & Christmas, said in a statement. This was the highest downsizing number reported in 8 months. And then less than an hour later, ADP comes out with its traditionally noisy number that tends to have zero correlation to the upcoming NFP result, and observes that the churn in the labor force is starting to pick up, with a change in private payrolls of +93K compared to expectations of 70K, and a prior revised number from 43K to 82K. This was the highest since November 2007. Net net: more people hired, more people fired. Judging by the futures response, this is good.
Nonfarm Private Employment Highlights -- November Report:
-- Total employment: +93,000
-- Small businesses* +54,000
-- Medium businesses** +37,000
-- Large businesses*** +2,000
-- Goods-producing sector: +14,000
-- Service-providing sector: +79,000
-- Manufacturing industry: +16,000
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.
"Although most segments of the U.S. private sector have experienced some positive job growth recently, the unemployment rate has remained stagnant for around eighteen months," said Gary C. Butler, President and Chief Executive Officer of ADP. "Most businesses still have little reason to add to their payrolls due to the ongoing uncertainty in the economy. To support job creation, our nation's policymakers should do their part to create an environment of reasonable economic certainty by clearly defining key tax and regulatory policies. Reduced economic uncertainty, along with appropriate near term incentives for businesses to invest and expand, will encourage businesses to hire."
According to Joel Prakken, Chairman of Macroeconomic Advisers, LLC, "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."