The private sector added 118,000 jobs in November, payroll processing firm ADP reported today. The figure is the firm's lowest estimate since August and comes in nearly 40,000 below October's 157,000, as well as slightly below consensus estimates of around 125,000. The low November figure portends that Friday's jobs report from the Labor Department will come in well below October's 171,000 mark.
Still, the jobs situation is likely not as gloomy as it might appear from this report. That's because factors outside of broader job market supply and demand pulled November's jobs figure in different directions.
"The number would have been over 200,000 if not for the impact of [Hurricane Sandy], which was evident across a wide array of industries," said Mark Zandi, chief economist at Moody's Analytics, which coproduces the report with ADP, in a call with reporters Wednesday. At the same time, he says, an earlier-than-usual Thanksgiving pulled more holiday shopping into November, bumping the jobs figure slightly higher.
All told, Zandi estimates that the private payrolls figure would have likely been closer to 150,000 without those factors — a good-but-not-good-enough total when it comes to bringing the unemployment rate down.
"If we had a good economy and the unemployment rate was low, 150,000 would be considered very good," Zandi says. "In fact, it's a pace that's just above what's needed to bring down the unemployment rate." However, with the unemployment rate at nearly 8 percent, this is an uncomfortably slow pace for job growth, as would-be workers wait for the situation to slowly improve.
Manufacturing employment fell considerably last month, shedding 16,000 jobs, in part due to the effects of Sandy. However, there were some bright spots in the report as well, particularly the 23,000 jobs added in construction, an industry greatly weakened by the housing collapse and subsequent slow recovery. The category of trade, transportation, and utilities also added 22,000 jobs in November, along with 16,000 jobs added in professional and business services, a broad category that includes fields such as accounting and business management.
One factor that Zandi says did not greatly affect this report is the fiscal cliff. Though the uncertainty created by potential tax hikes and spending cuts has caused businesses to cut investment in areas like ad spending and equipment, businesses have not yet started to cut payrolls, he says.
"We have not observed any change on hiring or firing decisions [as a result of the fiscal cliff]," Zandi said in Wednesday's call. "That's, I think, one key reason why consumer confidence has held up so much better than business confidence."
However, that trend can't hold forever, Zandi added. If the negotiations should drag far enough into 2013, he said, that would make businesses nervous enough to start cutting workers.
"I don't know how long this will last," he said. "I suspect as we go into next year, as we approach the debt ceiling by the end of February, the angst among investors and business people will rise, and they'll begin to lay off workers."
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Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter @titonka or via E-mail at firstname.lastname@example.org.