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US hiring last month was likely held back by Sandy

Published on NewsOK Modified: December 5, 2012 at 4:47 pm •  Published: December 5, 2012
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Kevin Cummins, U.S. economist at UBS, noted that Sandy hit a heavily populated area where many jobs pay above-average wages. The average weekly pay figure included in the jobs report is likely to decline as a result.

ADP, a payroll provider, said Wednesday that private companies added 118,000 jobs in November, down from 157,000 in the previous month. Mark Zandi, chief economist at Moody's Analytics, which helps compile data for ADP, estimated that the storm lowered the job gains by about 86,000.

But the payroll losses from the storm could be higher in the government's total. That's because ADP counts people as employed if they remain on a payroll — even if they're not paid. By contrast, the government counts people as employed only if they're paid.

The effect on hiring from impending tax increases and federal spending cuts — the "fiscal cliff"— is harder to quantify. Those measures are set to take effect in January unless Congress and the White House reach a budget deal first.

Companies might not be cutting jobs because of the fiscal cliff. But the uncertainty surrounding the outcome is likely delaying some hiring, economists say.

Carl Riccadonna, an economist at Deutsche Bank, said several reports show companies are spending less on large equipment. That suggests they're probably postponing some hiring, too.

"We haven't hit the cliff yet, but the downdrafts are already occurring," Riccadonna said.

Measures of hiring fell in two surveys released this week by the Institute for Supply Management, a private trade group of purchasing managers. Some companies in the service sector told the ISM that economic uncertainty was delaying hiring.

Another complicating fact is that Thanksgiving came earlier in November than usual this year. That might have led some retailers and restaurants to hire more holiday season staffers in November than is typical, Cummins said. Those jobs would add to last month's job gains.

All the cross-currents could make it hard to gauge the economy's underlying health from the November report.

"This is a particularly bad time for anybody to jump to any business or investment conclusions based on one number," said Jerry Webman, chief economist at OppenheimerFunds.