Friday, December 07, 2012 7:09 pm
US job gains defy Sandy and fears of fiscal cliff
By CHRISTOPHER S. RUGABERAP Economics Writer
Employers added 146,000 jobs in November and the unemployment rate dipped to 7.7 percent, a four-year low, the government said Friday.
Though modest, the job growth was encouraging because it defied disruptions from Superstorm Sandy and employers' concerns about impending tax increases from the year-end "fiscal cliff."
Analysts said the job market's underlying strength suggests that if the White House and Congress can reach a budget deal to avoid the cliff, hiring and economic growth could accelerate next year.
A budget agreement would coincide with gains in key sectors of the economy.
Builders are breaking ground on more homes, which should increase construction hiring. U.S. automakers just enjoyed their best sales month in nearly five years. And a resolution of the fiscal cliff could lead businesses to buy more industrial machinery and other heavy equipment. That would generate more manufacturing jobs.
"The ground is being prepared for faster growth," said Nigel Gault, an economist at IHS Global Insight.
House GOP leader John Boehner said Friday that the two sides had made little progress in talks seeking a deal to steer clear of the cliff.
The White House used Friday's mixed jobs report as an argument to push President Barack Obama's proposed tax-rate increases for top earners, public works spending and refinancing help for struggling homeowners.
Superstorm Sandy, contrary to expectations, dampened job growth only minimally in November, the government said. Job gains were roughly the same as this year's 150,000 monthly average, and the unemployment rate fell two-tenths of a percentage point to its lowest level since December 2008.
That suggests that fears about the cliff haven't led employers to cut staff, though they aren't hiring aggressively, either. The economy must produce roughly twice November's job gain to quickly lower the unemployment rate.
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 unemployment rate, derived from a separate survey of households, fell because 229,000 people without jobs stopped looking for work and so were no longer counted as unemployed.
The household survey asks about 60,000 households whether the adults have jobs and whether those who don't are looking for one. Those without a job who are seeking one are counted as unemployed. Those who aren't looking aren't counted as unemployed.
All told, 12 million people were unemployed in November, about 230,000 fewer than the previous month. That's still many more than the 7.6 million who were out of work when the recession officially began in December 2007.
A broader gauge counts the unemployed, plus part-time workers who want full-time work and people who have given up looking for a job. That total added up to 22.7 million people in November, down from 23 million in October.
Investors appeared pleased with the report. The Dow Jones industrial average closed up 81 points.
For now, worries about the cliff have led some companies to cut back on purchases of heavy equipment. Consumers are also signaling concern. A survey of consumer sentiment fell sharply in December, economists noted, partly over worries that taxes could rise next year.
But a resolution of the cliff could accelerate job growth in the construction and manufacturing industries. Those sectors, on average, pay more than the retail and restaurant jobs that have helped drive hiring in recent months and tend to contribute 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 about $13.40 for hotel, restaurant and other hospitality workers.
"The good news is not that the labor market is improving rapidly - it isn't - but that employment growth is holding up despite all the fears over the fiscal cliff," Gault said.
He estimates that a budget deal would boost the economy's average monthly job gains to about 200,000 next year.
One company that could step up hiring in 2013 is Ahaus Tool & Engineering in Richmond, Ind., which makes assembly machines for the automotive and power-generation industries.
Kevin Ahaus, president of the 90-person company and the fourth generation of his family to run it, says the company had its best year ever in the 12 months that ended in September. But since October, sales have leveled off. Many customers are asking for bids but not closing deals, Ahaus said, because of the uncertain economic outlook.
That, in turn, is causing him to delay hiring.
"I probably won't hire anybody until the first of the year because of all the unknowns out there," he said.
Many analysts thought Sandy would hold back job growth significantly in November because the storm forced restaurants, retailers and other businesses to close in late October and early November.
It didn't. In part, that's because the storm struck Oct. 29, but as long as employees had returned to work by Thanksgiving week, the survey counted them as employed.
Yet there were signs that the storm disrupted some areas of the economy in November. Construction employment dropped 20,000, for example.
Retailers added 53,000 positions last month, a sharp gain that likely reflected holiday hiring. Auto manufacturers added nearly 10,000 jobs. But overall manufacturing jobs fell by 7,000, partly a result of 12,000 jobs lost in food manufacturing that likely reflected layoffs at Hostess Brands Inc.
The rebound in housing is leading Georgia Pacific, a paper and wood products company, to hire. It is opening a new plant in South Carolina next year and is filling 140 jobs. So far, it's received 2,400 applications.
"It's a little overwhelming from an HR perspective," said Julie Brehm, vice president of human resources.