Private-sector data highlights weak U.S. job market
WASHINGTON — The unemployment scourge ravaging the United States showed no sign of letup in October, as the world’s biggest economy struggles to recover from recession, according to data released Wednesday.
With Europe’s debt crisis escalating, threatening global growth, the entrenched high US jobless rate undermines the economy’s resilience against external shock.
And it poses a challenge to President Barack Obama, whose $447 billion jobs creation bill is stalled in a gridlocked Congress, where Republican foes oppose new stimulus spending in the face of growing deficits.
The jobless rate has been stuck at 9.0 percent and above for all but two of the past 29 months.
On Friday, when the government releases its official jobless figure for October, that is not expected to change: analysts are forecasting it will remain at 9.1 percent, where it has been for four months straight, despite efforts by policy makers to encourage more hiring.
“The sluggish recovery in employment is continuing, with private payroll growth still not even fast enough to keep unemployment from rising further in the medium-term, never mind bringing it down,” said Ian Shepherdson, chief US economist at High Frequency Economics.
There was no encouragement for a different view from Wednesday’s data.
Private payrolls firm ADP reported Wednesday that US companies added 110,000 net jobs last month, down from 116,000 in September.
The jobs growth in October was entirely due to the massive service sector and small and medium-sized businesses, the firm said.
The report “suggests that the recent trend in private employment remains moderate, and probably is below a pace consistent with a stable unemployment rate,” ADP said.
Another report, by global outplacement firm Challenger, Gray & Christmas, showed US-based employers planned fewer job cuts in October after they hit a 28-month peak in September.
But its data revealed the number of planned job cuts in the first 10 months of the year was still 16 percent higher than the same period last year.
And on top of that, the Federal Reserve released its newest forecasts which showed it expected the unemployment rate to fall to no better than 8.5 percent by the end of 2012, compared to its June prediction of 7.8 percent.
Most analysts predict that Friday’s official data for last month will show the economy having spawned a total of just 85,000 net nonfarm jobs, down from 103,000 in September, with private posts falling by 20,000, to 117,000.
That is less than what is necessary to keep up with the growth of the working-age population, much less reducing the total number of unemployed from 14 million.
ADP noted that October’s job creation reflected the sluggish pace of US economic growth seen earlier in the year.
Growth in gross domestic product (GDP) — the nation’s output of goods and services — nearly stalled in the first half, rising only 0.4 percent in the first quarter and 1.3 percent in the second quarter.
The Federal Reserve noted that GDP growth picked up in the third quarter, to 2.5 percent, and would likely continue around that pace in the current quarter.
But it also cut its growth forecast for 2012, to 2.5-2.9 percent, not seen as strong enough to generate large numbers of jobs.
According to ADP, the service sector added jobs for the 20th consecutive month, but the number fell by 8,000 to 114,000.
Employment in the goods-producing sector and the manufacturing sector fell by a combined 12,000 jobs.
Small firms, those with up to 49 workers, and medium-sized businesses, with up to 499 workers, remained the engine of job growth, pumping out 58,000 and 53,000 posts, respectively. Bigger businesses eliminated 1,000 jobs.
The Challenger report said downsizing activity fell 63 percent to a June low, but that layoffs were still up 12.6 percent from October 2010.
While government and financial industry layoffs slowed, they still remained the top job-cutting sectors for the year.
John Challenger, the firm’s chief executive, warned they remain most at-risk amid the struggling economy.
“The two sectors are not out of the woods, by any means,” he said.
In the government sector alone, most of the cuts this year have been at the state level, he said, noting the full impact of mandated federal spending cuts has not yet been felt.
“Meanwhile, the European debt crisis is wreaking havoc on Wall Street.”