Automated Data Processing (ADP) reported that nonfarm payrolls rose 118,000 in November, lower than the 157,000 observed in October. Almost all of this increase stemmed from additional service sector workers, which increased by a net 114,000. Goods- producing firms hired just 4,000 net new employees in the month.
In the manufacturing sector, employment dropped by 16,000 workers. This was the fifth straight month of losses, according to ADP, totaling 60,000. This figure is larger than the official statistics from the Bureau of Labor Statistics (BLS), which reported declines of 27,000 in August and September with a gain of 13,000 in October. Nonetheless, it is an indication that the BLS results, when they are released on Friday for November, will be weak at best, and could be negative.
ADP said that the losses in the manufacturing workforce offset a healthy 23,000-worker increase in construction employment. The trade, transportation and utilities (up 22,000), professional business services (up 16,000), and financial activities (up 13,000) sectors also saw more hires in the month.
Breaking out the analysis by company size, larger businesses – particularly those with over 1,000 employees – added the most net new jobs, hiring an additional 62,000 workers. Small and medium-sized businesses hired 19,000 and 33,000 net new workers, respectively, in the month. This is a bit of a turnaround from prior months, when medium-sized (e.g., those with between 50 and 499 workers) led the net job gains.
In summary, the weaker employment numbers in November for manufacturing stemmed from two things. First, Hurricane Sandy reduced some activity, particularly in the Mid-Atlantic regions, and we have seen this storm have an impact in a number of economic statistics. But, the larger challenge right now is the uncertainty created by the fiscal cliff, with slowing global sales also playing a role. As Moody’s Analytics Chief Economist Mark Zandi, who produces this report for ADP, put it, “Businesses appear to be holding firm on their hiring and firing decisions.”
Chad Moutray is chief economist, National Association of Manufacturers.