Job Growth Disappoints in November, But Rebound Expected
Private sector job growth fell short of expectations in November, with only 146,000 new jobs added, according to the latest ADP National Employment Report. Economists had predicted 163,000 new jobs, and the actual number is also lower than the revised 184,000 jobs added in October.
Manufacturing and Small Business Hiring Slows Down
The slowdown in manufacturing and small business hiring was a major contributor to the weaker-than-expected job growth. Manufacturers reduced their workforce by 26,000 in November, making it the weakest month for the industry since spring. Additionally, financial services and leisure and hospitality sectors also experienced sluggish growth.
Mixed Industry Performance
“While overall growth for the month was healthy, industry performance was mixed,” said Nela Richardson, chief economist at ADP. Despite the slow growth in some industries, the private sector still managed to add 146,000 new jobs in November.
Friday’s Payrolls Report Expected to Rebound
The ADP report comes ahead of Friday’s U.S. payrolls report for November, which is expected to show a rebound in employment after storms and labor strikes dragged down October’s numbers. Economists are optimistic that the government data will paint a more positive picture, with some predicting a stronger rebound than the ADP report suggests.
Federal Reserve Watching Labor Data Closely
Federal Reserve officials will be closely watching labor data ahead of their December meeting, where employment trends will play a significant role in their decision to lower interest rates again. While the ADP report may have fallen short of expectations, it still provides valuable insights into the labor market, which will be considered alongside the government data.
Independent Look at the Labor Market
According to Diane Swonk, KPMG’s chief economist, the ADP report and government data may diverge, providing an independent look at the labor market. “The [ADP] data no longer acts as a forecast for the BLS survey but is an important independent look at the labor market,” Swonk wrote. This means that the ADP report may not always accurately predict the government data, but it still offers a unique perspective on the labor market.
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