The focus will likely remain on the unresolved 'Fiscal Cliff'
question, even though we have a number of key economic reports
this morning. The problem with economic data lately has been that
it is difficult to discern underlying trends given distortions by
Hurricane Sandy. And we are seeing the same element at play in
today's private-sector jobs reading from payroll processor
Automatic Data Processing
), though the headline tally is only modestly lower than what was
The non-manufacturing ISM survey coming out a little later is
expected to have the least amount of storm effects and will
likely provide a relatively undistorted look on the economy's
The ADP report is showing modestly weaker-than-expected
private-sector jobs of 118K in November versus expectations of
125K jobs created. This compares to gains of 157K in October
(revised down by 1K from 158K originally reported). The November
tally was reportedly lowered by approximately 86K due to Sandy,
with manufacturing, retail, leisure and hospitality, and temp
work particularly hard hit.
Goods producing sectors added 4K jobs in the month, with gains
of 23K in construction offsetting the decline of 16K in
manufacturing. In terms of company size, small businesses (with
less than 50 employees) added 19K jobs, medium businesses (less
than 500 employees) added 33K, and large businesses (more than
500 employees) added 66K.
The service sector added 114K jobs. The employment component
of today's service sector ISM report will give us more color on
trends in this key sector.
This is not a bad report, keeping in mind that the storm
took out roughly 86K jobs from the tally. What this means that
pace of job creation in the economy has not materially changed
from what we have been seeing in recent months. The concern has
been that the recent downtrend in corporate capital spending will
start showing up in reduced hiring as well. But this report
doesn't show much evidence of that.
The expectation for Friday's BLS report ahead of this morning's
ADP report was for headline gains of around 80K. It is unlikely
that we will see any material revisions to those estimates.
The key takeaway from this ADP report coupled with what we
have been seeing in recent months is that the labor market is
modestly improving at a pace somewhere in the 150K monthly range.
If we don't see any material deterioration in this trend despite
the 'Fiscal Cliff'-related uncertainties, then I will be counting
that as a positive for the economy.
AUTOMATIC DATA (ADP): Free Stock Analysis
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