November Jobs Report: What to Expect
NEW YORK (TheStreet) -- A strong ADP report on private sector growth, the largely downward trend in jobless claims in recent weeks and signs of returning consumer confidence have raised expectations for a recovery in the job market.
On Friday, the Labor Department is expected to report nonfarm payrolls rose by 140,000 in November after an increase of 151,000 in the previous month, according to the consensus estimate of economists polled by Thomson Reuters. Estimates for private sector growth among analysts who spoke to TheStreet ranged from 158,000 to 170,000.
On Wednesday, the ADP National Employment Report said private sector employment rose by 93,000. That number was well ahead of expectations for an addition of 53,000, and it raised hopes for a strong government report on Friday.
On Thursday, the Labor Department said initial weekly jobless claims for the week ended Nov. 20 rose by 26,000 to 436,000 after falling to a two-year low the week before. Still, the four-week moving average, which adjusts for week-to-week volatility, edged lower, providing evidence that layoffs might be slowing.General Motors (GM), General Electric (GE) and Chrysler were among firms that announced new hiring earlier this week. Jeffrey Kleintop of LPL Financial expects Friday's jobs report to be solid, even slightly better than expectations. "We are seeing what maybe could be the benefits of gridlock. The idea that the legislative environment is going to show a slower pace of change and that encourages businesses to make long-term investments in expanding their businesses but also hiring," he said. Companies have so far shown a reluctance to hire, given an uncertain tax and regulatory outlook. But they have managed to register strong profit growth on the back of labor cuts and improving productivity. Kleintop noted that the Labor Department's latest report on productivity showed gains from productivity had slowed. That means that companies that wish to boost output will probably have no choice but to hire more workers. Still, economists say that while the job market appears to be at the cusp of a recovery, growth in jobs may not be enough to lower the unemployment rate. Mike Schenk, a senior economist at the Credit Union National Association, says the unemployment rate will likely remain stubbornly around 9.5% through 2011, even as the economy adds more jobs in the months ahead.
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