U.S Economy Adds Jobs, Unemployment Rate drops to 7.7%
Updated : December 27th, 2012
It takes more than a Superstorm to disrupt the U.S job market.
Superstorm Sandy didn’t do as much damage as was anticipated to the nation’s employment situation, at least that’s what the government monthly data on the jobs market told when it illustrated the nation’s jobless rate dip to 7.7%. Forecasters and businesses, however, by now are looking past that report to the risks to jobs from the economic cliff.
146,000 jobs were added to business payrolls in last month, and the unemployment rate dipped a couple of ticks to 7.7%, a four-low, according to the government. Nigel Gault, chief U.S. economist at the research firm IHS Global Insight, says the report did not say much that’s new about the US economy.
Gault says that a hundred and forty six thousand jobs are very similar to the average that individuals have seen so far in 2012. It’s still a much delayed, slow recovery.
Though modest, the job growth was encouraging as it challenged disruptions from Superstorm Sandy and employers’ worries about awaiting tax increases from the year end “fiscal cliff.”
Analysts said the job market’s fundamental strength suggests that if the Congress and White House can reach a budget deal to keep away from cliff, hiring and economic growth could accelerate next year.
A budget agreement would match with the gains in key sectors of the economy.
With the destruction of homes construction hiring should increase. U.S automakers just enjoyed their best sales month in almost 5 years. And a resolution of the fiscal cliff could lead businesses to procure more industrial machinery and other heavy equipment. That would produce more manufacturing jobs.
“The ground is being set for faster growth,” said Nigel Gault.
House GOP leader John Boehner said that the two parties had made little progress in talks finding a deal to steer clear of the cliff.
The White House employed Friday’s mixed jobs report as a disagreement to drive President Barack Obama’s proposed tax rate increases for top earners, public works spending and refinancing help for stressed homeowners.
Superstorm Sandy, opposite to expectations, dampened job growth only minimally in November this year, the government said.
Job gains were more or less the same as this year’s 150,000 monthly average, and the jobless rate dropped 2/10ths of a percentage point to its lowest level since December 2008.
That implies that fears about cliff have not led employers to cut staff, however they are not employing aggressively, either. The economy must create job gain twice as November’s in order to lower the unemployment rate quickly.
Recent report included some disappointing signs. Employers added a total of 49,000 jobs in October and September than the government had initially expected. Monthly job totals come from a survey of 140,000 firms and government agencies, which jointly employ about 1 in 3 nonfarm workers in the United States.
Friday’s report included some discouraging signs. Employers added 49,000 fewer jobs in October and September combined than the government had initially estimated. Monthly job totals come from a survey of 140,000 companies and government agencies, which together employ about 1 in 3 nonfarm workers in the United States.
The jobless rate, deduced from a separate analysis of households, fell because 229,000 jobless people stopped seeking work and thus were no longer counted as unemployed.
The household survey inquires about 60,000 households whether the adults have jobs and whether those who don’t are seeking one. Those without a job who are searching one are counted as jobless. Those who are not searching are not counted as jobless.
As told, 12 million people were laid-off in November 2012, about 230,000 less than the previous month. That’s still many more than the 7.6 million who were out of work when the downturn officially began in December 2007.
A broader gauge considers the unemployed, plus part-time workers who want full-time work and those who have stopped looking for a job. That total added up to 22.7 million people in November, down from 23 million in October.
Investors appeared satisfied with the report. The Dow Jones industrial average closed up 81 points.
For now, doubts about the cliff have led some companies to cut back on purchases of heavy equipment. Consumers are also signal concern. A review of consumer sentiment fell sharply in December, economists noted, partly over worries that taxes could go up next year.
But a resolution of the cliff could speed up job growth in the construction and manufacturing industries. Those sectors, on average, pay more than the restaurant and retail jobs that have helped drive hiring in recent months and tend to put in more to economic growth.
Construction workers earned an average of $26 an hour in November. Factory workers averaged $24 an hour. Both far exceed the hourly average of $16.40 for retail employees and almost $13.40 for restaurant, hotel and other hospitality workers.
The labor market is improving rapidly and it is estimated that a budget deal would improve the economy’s average monthly job gains to about 200,000 in 2013.
One company that could boost hiring in 2013 is Ahaus Tool & Engineering in Richmond, Ind., which makes assembly machines for the power-generation and automotive industries.
Kevin Ahaus, president of the 90-person company says the company had its best year ever in the 12 months that ended in September this year. But since October, sales have leveled off. According to Ahaus, many customers are asking for bids but not closing deals, all because of the uncertain economic outlook.
That, in turn, is causing to delay hiring.
Ahaus said, “I probably won’t hire anybody until the first of the year because of all the unknowns out there.”
As stated, many analysts thought Sandy would delay job growth a lot in November as the storm forced retailers, restaurants and other businesses to close in late October and early November.
It didn’t. In part, that’s because the storm hit Oct. 29, but as long as employees had returned to work by Thanksgiving week, the survey considered them as employed.
However there were signs that the storm disrupted some sectors of the economy in November. For instance, Construction employment dipped to 20,000.
Retailers added 53,000 positions previous month, a sharp gain that possibly reflected holiday hiring. Auto manufacturers added almost 10,000 jobs. But in general, manufacturing jobs fell by 7,000; partly a result of 12,000 jobs lost in food manufacturing that possibly reflected layoffs at Hostess Brands Inc.
The recovery in housing is leading Georgia pacific, a paper and wood products company, to employ. It is opening a new plant in South Carolina next year and is filing 140 jobs. By far, it has received 2,400 applications.
“It’s a little overwhelming from an HR perspective,” said Julie Brehm, vice president of human resources.