Jobs Grow, Productivity Up In U.S.
Andrew Farrell, 12.05.07, 4:30 PM ET
American worker productivity and job growth leapt higher last month, but its unlikely the stronger-than-expected data will be enough to dissuade Federal Reserve policymakers from slashing interest rates next week to ensure the U.S. economy stays out of recession.
An analysis of payroll data released on Wednesday showed an increase in private-sector employment of 189,000 during November, significantly above market expecations. The analysis, which was performed by Macroeconomic Advisers, used payroll data from Automatic Data Processing (nyse: ADP - news - people )'s clients. The number was more than twice the 65,000 rise expected by analysts.
The growth was stronger than expected and bigger than the previous month's gains. On Wednesday, ADP and Macroeconomic Advisers upwardly revised their figure for October growth to 119,000, an increase of 13,000. That remains below the 166,000 reported by the federal government for the month, though the figures often are subject to change and the federal government data also includes government jobs. ADP processes paychecks for more than 20 million U.S. workers, and the company feels it has insight into employment trends.
The sizable November growth was boosted by a rapidly growing service-producing sector. Service jobs climbed by 197,000, according to the ADP data. That compensated for a decline of 8,000 jobs in the goods-producing sectors.
The November employment data showed signs of stabilization in the troubled residential-construction and mortgage-lending sectors. Jobs in both areas have tumbled over the past year because of a weak U.S. housing market and restricted mortgage lending.
"Today’s data suggest that in these two crucial sectors employment may be stabilizing. In November, construction employment fell for the 12th consecutive month, but November’s decline of 6,000 was the smallest since January," said Joel Prakken, chairman of Macroeconomic Advisers. "Employment in financial activities, which declined by 16,000 from July through October, reversed course and grew 10,000 in November."
Also Wednesday, the Labor Department reported that worker productivity climbed at an annualized rate of 6.3% during the third quarter, an upward revision from the previous rate of 5.7%. The climb was stronger than expected and the biggest growth since the summer of 2003.
Despite the strong economic data, the Fed is widely expected to cut interest rates by at least 25 basis points next week. Central bankers are worried the U.S. economy is losing steam. Federal Reserve Governor Janet Yellen said earlier this week she expects "very meager" fourth-quarter growth. (See: "San Francisco Fed's Yellen Sees Weaker Economy")
University of Maryland business professor Peter Morici explained the robust productivity growth actually gives the Fed more leverage to cut interest rates. "Continued strong productivity growth helps keep inflation in check in the face of rising oil prices, and accommodates moderate wage growth," he said. "The Fed can focus on the subprime crisis and stabilizing credit markets without fear of a significant surge in inflation."
The favorable economic data apparently pushed investors from bonds to equities early on Wednesay. The Dow Jones industrial average closed 1.5% higher, while prices fell on U.S. government bonds, sending the yield on the 10-year Treasury note to 3.94% from 3.89% late on Tuesday. The dollar gained 0.6% against the Euro.
There was some bearish economic data released Wednesday. The Institute for Supply Management said its index measuring activity in the non-manufacturing industry fell to 54.1 in November from 55.8 in October. Economists had expected a November reading of 54.8.
The Associated Press and Thomson Financial News contributed to this artricle.
Find thousands of Bilingual jobs at LatPro.com.
American worker productivity and job growth leapt higher last month, but its unlikely the stronger-than-expected data will be enough to dissuade Federal Reserve policymakers from slashing interest rates next week to ensure the U.S. economy stays out of recession.
An analysis of payroll data released on Wednesday showed an increase in private-sector employment of 189,000 during November, significantly above market expecations. The analysis, which was performed by Macroeconomic Advisers, used payroll data from Automatic Data Processing (nyse: ADP - news - people )'s clients. The number was more than twice the 65,000 rise expected by analysts.
The growth was stronger than expected and bigger than the previous month's gains. On Wednesday, ADP and Macroeconomic Advisers upwardly revised their figure for October growth to 119,000, an increase of 13,000. That remains below the 166,000 reported by the federal government for the month, though the figures often are subject to change and the federal government data also includes government jobs. ADP processes paychecks for more than 20 million U.S. workers, and the company feels it has insight into employment trends.
The sizable November growth was boosted by a rapidly growing service-producing sector. Service jobs climbed by 197,000, according to the ADP data. That compensated for a decline of 8,000 jobs in the goods-producing sectors.
The November employment data showed signs of stabilization in the troubled residential-construction and mortgage-lending sectors. Jobs in both areas have tumbled over the past year because of a weak U.S. housing market and restricted mortgage lending.
"Today’s data suggest that in these two crucial sectors employment may be stabilizing. In November, construction employment fell for the 12th consecutive month, but November’s decline of 6,000 was the smallest since January," said Joel Prakken, chairman of Macroeconomic Advisers. "Employment in financial activities, which declined by 16,000 from July through October, reversed course and grew 10,000 in November."
Also Wednesday, the Labor Department reported that worker productivity climbed at an annualized rate of 6.3% during the third quarter, an upward revision from the previous rate of 5.7%. The climb was stronger than expected and the biggest growth since the summer of 2003.
Despite the strong economic data, the Fed is widely expected to cut interest rates by at least 25 basis points next week. Central bankers are worried the U.S. economy is losing steam. Federal Reserve Governor Janet Yellen said earlier this week she expects "very meager" fourth-quarter growth. (See: "San Francisco Fed's Yellen Sees Weaker Economy")
University of Maryland business professor Peter Morici explained the robust productivity growth actually gives the Fed more leverage to cut interest rates. "Continued strong productivity growth helps keep inflation in check in the face of rising oil prices, and accommodates moderate wage growth," he said. "The Fed can focus on the subprime crisis and stabilizing credit markets without fear of a significant surge in inflation."
The favorable economic data apparently pushed investors from bonds to equities early on Wednesay. The Dow Jones industrial average closed 1.5% higher, while prices fell on U.S. government bonds, sending the yield on the 10-year Treasury note to 3.94% from 3.89% late on Tuesday. The dollar gained 0.6% against the Euro.
There was some bearish economic data released Wednesday. The Institute for Supply Management said its index measuring activity in the non-manufacturing industry fell to 54.1 in November from 55.8 in October. Economists had expected a November reading of 54.8.
The Associated Press and Thomson Financial News contributed to this artricle.
Find thousands of Bilingual jobs at LatPro.com.
Labels: productivity, the jobs report
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