Will holiday hiring save U.S.from a 3rd month of weaker job growth?
The battle for holiday shopping dollars may be key to Friday's jobs report.
Early holiday hiring could stoke job growth in this week’s employment report, some economists say, despite a payroll processor’s estimate Wednesday that gains were disappointing again in October.
ADP said businesses added 147,000 jobs last month, below the 165,000 additions economists expected. It forecast the Labor Department on Friday will record 175,000 new jobs in the public and private sectors in the final employment report before the election.
Democrat Hillary Clinton could cite a solid report as further evidence of steady job gains during the Obama administration, while Republican Donald Trump could point to a weak payroll total as the sign of a sluggish labor market.
Although ADP tries to foreshadow Labor’s private-sector total, it has missed by an average 46,000 a month over the past two years, according to High Frequency Economics. For September, ADP was close to the mark, initially estimating businesses added 154,000 jobs, while Labor counted 167,000.
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Average monthly job gains have slowed this year to 178,000 from 229,000 in 2015, according to Labor’s figures, a downshift many economists anticipated in light of a near-normal 5% unemployment rate that’s providing employers with fewer qualified candidates. Payroll growth fell short of estimates in August and September, with gains of 167,000 and 156,000, respectively.
But retail stores have hired seasonal employees earlier this year to compete with their online counterparts who have beefed up their warehouse staffs, says economist Diane Swonk, who heads DS Economics. As a result, she says, some hiring that typically would occur in November was pulled forward a month.
“They didn’t want to wait too long because they were afraid there wouldn’t be anybody left,” says Swonk, who predicts Labor will announce 190,000 payroll gains in October. The development, however, could slow seasonal hiring this month.
Outplacement firm Challenger, Gray and Christmas estimates retailers will bring on about 739,000 holiday workers in the final three months of the year, matching their seasonal staffing in 2015.
Other indicators also point to sturdy job totals for October, economist Andrew Hunter of Capital Economics says. Those include initial jobless claims — a gauge of layoffs — that are near 40-year lows, service-sector hiring that recently hit an 11-year high and a sharp rise in temporary employment in September, Hunter says. Employers often add temporary workers before expanding their permanent staffs.
At the same time, some economists and public companies have cited business uncertainty surrounding the presidential election that has led some firms to defer hiring and investment until the vote provides a clearer view tax and other policies.
The Federal Reserve is likely to scrutinize Labor’s payroll surveys for November and December as it weighs an expected interest rate hike at a mid-December meeting. The Fed has kept its key rate unchanged since lifting in late 2015 for the first time in nine years.
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In September, ADP said, small businesses added 34,000 jobs, midsize ones 48,000, and large companies 64,000.
Professional and business services led the gains, with 69,000. Leisure and hospitality added 38,000, and health care 34,000. Construction companies cut 15,000 jobs and manufacturers, still coping with the oil downturn and a weak global economy, trimmed 1,000.
ADP Vice President Ahu Yildirmaz said job growth “appears to be shifting from small to large companies” because of the lessening impact of the sluggish global economy, which hammered bigger firms earlier in the year. Also, she said, in a tight labor market, “large companies often have the resources to attract workers with better pay and benefit packages.”
