Private-Sector Employment Rises in October
(Employment report article updated with additional ADP data and market reaction.)
NEW YORK (
) -- Private-sector employment rose in October on a seasonally adjusted basis after registering a modest decline in the previous month, according to the latest ADP National Employment Report.
Private businesses added 43,000 jobs in October, led by a jump in service sector employment. The growth in private payrolls came in higher than expected. Economists were expecting the ADP to report an increase of 23,000. But the growth in payrolls was still not sufficient to reduce the unemployment rate.
"Employment gains of this magnitude are not sufficient to lower the unemployment rate," reads the report. "Given modest GDP growth in the second and thirds quarters, and the usual lag of employment behind GDP, it would not be surprising to see several more months of lethargic employment gains, even if the economic recovery gathers momentum."
Economists say jobs need to grow by 200,000 to 300,000 a month to signal strong recover and by 120,000 jobs just to keep pace with population growth.
The services sector added 77,000 jobs, partially offsetting the loss in the goods producing sector of 34,000. Manufacturing jobs declined for the second consecutive month, with a drop of 12,000 jobs. The construction sector, which has shed more than 2 million jobs since the January 2007 peak, lost another 23,000.
In another report released on Wednesday, global outplacement firm Challenger Gray & Christmas said downsizing activity fell for the tenth consecutive month. Employers announced job cuts totaling 37,986 during the month, according to the report, 2.2% higher than those planned in the previous month. Entertainment and leisure businesses announced the most layoffs followed by the government and nonprofit sector.
Overall, the pace of job cutting is down 62 percent from a year ago,with employers announcing 449,258 job cuts year to date, compared to1,192,587 over the same period in 2009, the report said.
CVS Pharmacy
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, Atlantic City's Borgata Hotel & Casino in which
Boyd Gaming
(BYD) - Get Report
has a 50% stake and
Nokia
(NOK) - Get Report
have been among the
companies that have announced layoffs in recent weeks.
The ADP number has tended to come in below the government's report of nonfarm payrolls. The Labor Department is expected to report on Friday that private sector payroll increased 60,000 in October, according to consensus estimates from
Briefing.com
. But a better-than-expected report from the ADP might lead to a revision in estimates from economists.
Last month, the government said that the
U.S. economy shed 95,000 jobs.
On Thursday, the Labor Department will also release its weekly unemployment claims report. Initial weekly claims is expected to rise by 11,000 to 445,000 in the week ended Oct.30
after unexpectedly dropping to 434,000 in the previous week.
Unemployment numbers will be closely followed by the
Federal Reserve
, which is
widely expected to announce that it will resume the purchase of long term bonds to lower yields and boost economic activity,
as unemployment rates are too high and inflation too low.
Stocks were rising in premarket trading following the private sector employment report and in anticipation of the Fed's announcement this afternoon. The
SPDR Dow Jones Industrial Average ETF
(DIA) - Get Report
and the
SPDR S&P 500 ETF
(SPY) - Get Report
were up 0.3% each.
-- Written by Shanthi Venkataraman in New York
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