U.S. Payrolls Increase 94,000, More Than Forecast (Update1)
By Joe Richter
Dec. 7 (Bloomberg) -- Employers in the U.S. hired more workers than forecast in November, and the unemployment rate was unchanged, suggesting the labor market may be strong enough to keep the economy from tipping into recession.
Payrolls rose by 94,000 after a 170,000 increase in October, the Labor Department said today in Washington. The jobless rate remained at 4.7 percent for the third month in a row.
Federal Reserve Chairman Ben S. Bernanke and his colleagues are counting on wage gains to help consumers weather declining real estate and stock prices, rising energy costs and stricter lending guidelines. More jobs may mean policy makers won't need to lower interest rates much more to sustain the expansion.
``The economy's forward progress has not been halted yet from the credit-market turmoil and housing-market recession,'' Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, said before the report. ``Businesses continue to increase their hiring at a moderate rate and this will keep consumer spending in the plus column.''
Economists surveyed by Bloomberg News had forecast an increase of 80,000 in payrolls, according to the median of 82 estimates, compared with an originally reported gain of 166,000 in October. Predictions ranged from a loss of 5,000 to a 195,000 gain.
September, October Revisions
Revisions in September and October figures brought job growth for those two months to 214,000, or 48,000 fewer than the government had estimated a month ago.
Estimates for unemployment ranged from 4.7 percent to 4.8 percent. The rate has been rising since reaching a five-year low of 4.4 percent in March.
The jobs report will be ``a linchpin'' in the Fed's rate deliberations on Dec. 11, John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, said before the report. Silvia said a payrolls figure between 80,000 and 100,000 would justify a quarter percentage-point cut in the Fed's benchmark rate next week.
Federal funds futures before the report showed traders saw a 100 percent chance of a reduction in the benchmark rate next week, with a 36 percent probability of a half-point move. The Fed has cut the target rate by 0.75 percentage point over the previous two meetings.
Below ADP Figures
The figures show a less robust job market than depicted by a private report earlier this week. Data compiled by ADP Employer Services showed companies hired 189,000 additional workers in November. The ADP figures include only private employment and don't take into account hiring by government agencies.
``Fortunately, we haven't seen the kind of bad news we've seen everywhere else in the economy,'' Harvard University economist Martin Feldstein said in an interview Dec. 5. ``Employment so far has been holding up. It's not gangbusters, but it's holding up reasonably well.''
Service industries, which include banks, insurance companies, restaurants and retailers, added 127,000 workers last month after increasing payrolls by 192,000 in October.
Retailers added 24,200 jobs, the first increase in four months, after cutting 15,000 jobs in October.
Google Inc., owner of the most-popular Internet search engine, said in October that third-quarter profit jumped more than analysts estimated. The Mountain View, California-based company added 2,130 employees in the quarter, bringing its total to 15,916.
Factory Payrolls Shrink
Factory payrolls decreased by 11,000 after falling 15,000 a month earlier. Economists had forecast a drop of 15,000 in manufacturing employment. Builders hired 24,000 fewer workers in November, the fifth month of declining construction payrolls.
Midland, Michigan-based Dow Chemical Co., the largest U.S. chemical maker, said this week it will shut a number of plants around the world to cut costs, eliminating about 1,000 jobs. The closures include automotive sealant units in North America, Dow said.
Not all factories are cutting back. General Electric Co., the biggest wind-turbine maker in the U.S., said last month that supplier TPI Composites Inc. plans to build a factory in Newton, Iowa, to expand capacity for making blades, adding 500 jobs within three years.
Improving demand from abroad is helping others. Rockwell Automation Inc., the world's largest company focused solely on factory controls, said last month that overseas sales will rise to the highest level ever this fiscal year. The Milwaukee-based company is dealing with a shortage of qualified engineers by training current employees and recent college graduates.
Government Jobs
Government payrolls increased by 30,000 during the month after gaining 38,000 in October.
Hourly wages rose 8 cents, or 0.5 percent, on average to $17.63 in November and were up 3.8 percent from a year earlier. Economists had expected a 0.3 percent increase for the month and 3.8 percent for the 12-month period.
Average weekly hours worked by production workers held at 33.8 for a fifth month. Average weekly earnings rose to $595.89 last month from $593.19 the prior month.
Consumers face ``headwinds'' from reduced access to credit, higher gasoline prices and falling home values, Fed chief Bernanke said last week. The number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes, a report yesterday from the Mortgage Bankers Association showed.
Consumer Spending
Consumer spending stalled in October after adjusting for inflation, the weakest performance in seven months, according to figures from the Commerce Department.
General Motors Corp. and Ford Motor Co., bracing for sales declines to continue into 2008, said this week they'll trim production in the first quarter.
Midland, Michigan-based Dow Chemical Co., the largest U.S. chemical maker, said on Dec. 4 that it will shut a number of plants around the world to cut costs, eliminating about 1,000 jobs. The closures include automotive sealant units in North America, Dow said.
Revisions issued by the Commerce Department last week showed wages rose less than previously estimated during the second quarter. The adjustment suggests fewer jobs were created than previously estimated, income gains were smaller, or a combination of both, economists said.
To contact the reporter on this story: Joe Richter in Washington Jrichter1@bloomberg.net
Last Updated: December 7, 2007 08:36 EST |
