- - Thursday, December 2, 2010


In case you have been under a rock the past several months, one of the greatest concerns across the country is job growth. On Friday, we get the latest view on this when the Labor Department issues its November Employment Report.

Wall Street expectations call for non-farm private payrolls to rise by 175,000 in November, up from 159,000 in October. Given the slightly higher than expected initial jobless claims that hit the market Thursday, I thought it prudent to review several other perspectives about what job creation looked like for November.

ADP this week shared its latest national employment report that found private-sector employment increased by 93,000 from October to November on a seasonally adjusted basis. That marked the 10th consecutive month of job gains found by ADP and was the highest level in three years. At the same time, ADP raised its October findings to an increase of 83,000 private-sector jobs from the prior 43,000. In my view, that is a pretty significant revision to the upside, though ADP tempered its November findings by saying that “employment gains of this magnitude are not sufficient to lower the unemployment rate, which likely will remain above 9 percent for all of 2011.”

Gallups findings, however, suggest that the unemployment rate dipped below 9 percent to 8.8 percent at the end of November. The poll also showed declines in underemployment as well as in unemployment for part-time workers. I must point out that Gallups data lack any seasonal adjustments while statistics put forth by the Labor Department do. Therefore, I would not expect the Labor Department to print an 8.8 percent unemployment number for November. Accounting for these seasonal factors, Gallup estimates that the official government unemployment data for November will decline to the 9.3 percent to 9.5 percent range, which is below the current consensus view of 9.7 percent in November and Octobers 9.6 percent reading.

So far, these two views are more or less in sync with each other — better jobs and a reduction in unemployment, but that may not be enough to break the 9 percent level anytime soon.

Now for a different perspective.

Outplacement consultancy Challenger, Gray & Christmas Inc. this week revealed findings that were far more mixed. The pace of downsizing surged to its highest level in eight months, as employers announced plans to reduce payrolls by 48,711 jobs in November. Lets put some perspective around that surge. Not only were those November job cuts 28 percent higher than the 37,986 planned layoffs reported in October, they were the highest job-cut total since March, when employers announced plans to cut 67,611. Challenger, Gray was not all doom and gloom — they found more than 26,000 hiring announcements, though job cuts still outnumbered hirings.

Digging further into the Challenger, Gray report, job cuts were led by the government and nonprofit sector, which announced 10,761 layoffs during the month. This marks the seventh time this year that the sector was the largest job cutter. Government and nonprofit agencies have cut 138,979 jobs this year, which is far more than the second-ranked pharmaceutical industry, which has announced 50,168 job cuts to date.

Monster Worldwide’s Monster Employment Index offers another view, which is based on a real-time review of employer job opportunities derived from a representative selection of corporate career sites and job boards, including Monster.

I would point out that the index reflects trends in employer online recruitment activity nationwide, which may or may not be in tune with other reports and methodologies that reflect both online and more traditional recruiting activity. But with that out of the way, the Monster Employment Index for November showed the 10th consecutive month of a positive annual growth rate — stable at 13 percent in November. Moreover, all 28 metro areas covered by the report were up over November of last year.

That’s the good news. The modest bad news is the index dipped on a month-to-month basis to levels in line with activity back in April and May and is several percentage points below the index peak from June.

Taking all of the above into account, it seems Fridays report from the Labor Department will show private-sector job growth and job losses from the public sector. It also seems, however, that the job growth we will hear about is not enough to put a meaningful dent in the unemployment rate and prospects for that happening appear dim, at least for now.

In other words, while we might be getting closer to the edge of the forest, we are not out of the woods just yet.

Chris Versace, the thematic investor, is director of research at Think 20/20, an independent equity research and corporate-access firm in the Washington, D.C., area. He can be reached at cversace@washingtontimes.com. At the time of publication, Mr. Versace had no positions in companies mentioned. However, positions can change.

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