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Despite Growth, Job Prospects May Dim

Despite an unexpected boost in hiring among private businesses, some economists warn job-seekers have little to be cheery about.


At first glance, the figures are impressive. Jobs in the private sector for November rose by 206,000 on the month on a seasonally adjusted basis, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. Economists had expected a jump of just 130,000. However, analysts expect unemployment to remain at 9% in November. “There is still a lot of seasonal hiring,” says Mark Grant, managing director at Southwest Securities in Dallas, Tx. “This is perhaps a little good news, but not much really.”

ADP accounts for the annual staffing up for the holidays, but Grant says many businesses, particularly smaller mom-and-pop operations –may not be realistic about how many of the new hires are temporary. Employment on small payrolls—those with up to 49 workers—rose 110,000 in November. “The numbers  are very fuzzy because of all the hiring for Christmastime,” Grant says. “It’s very hard to make out what the actual reality is in the November/December period.”

The services sector continues to do well with hiring, which Grant says also points to seasonal hiring. Of the 110,000 jobs created by small private businesses in November, 15,000 jobs were created by the goods-producing sector, but 95,000 jobs were created by the service-producing sector. As Pay Dirt reported earlier this month, analysts say the need for more services staff in restaurants, hotels and customers service usually points to a case of seasonal hiring for the holiday season. Grant says we’ll get a fuller picture when the Bureau of Labor Statistics data and unemployment figure – currently 9% – is released Friday.

But some economists believe the November jobs increase is sustainable. Mark Perry, visiting scholar at the American Enterprise Institute in Washington, DC., says the Bureau of Labor Statistics employment numbers for November due Friday, which include government workers, will support that. “I think we can conclude that the increase in ADP employment is good news for the labor market and U.S. economy, and it’s not just a temporary seasonal boost,” he says. ADP and BLS data track pretty closely over time, he says. “In that case, the BLS jobs rise might also be higher than the 141,000 market consensus.”

Philip Noftsinger, president of CBIZ Payroll, a business services firm based in Roanoke, VA., takes a more lukewarm view. “I would be guarded with the information that came out today,” he says. “Put yourself in the role of a small shop owner who tells a new employee, ‘I’d like to keep you, but it depends on how much business comes through the door.’”


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    • I run a small business and the discussions I have with fellow small business owners is very similar: We need some temporary hires, but past the seasonal needs, there still are not enough buyers; still too many unemployed and looming government cutbacks. By January, I will have to let the 4 people I hired go, which I disclosed when I hired them.

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