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ADP: decline in employment levels, Superstorm Sandy to blame?

decline in employment

While Superstorm Sandy took a hit on the east coast, the small business sector had a tough month as a decline in employment compared to previous months is now being reported.

decline in employment

Decline in employment levels

According to ADP’s November Employment Report released today, 118,000 nonfarm private jobs were added in November, down from an adjusted 157,000 jobs in October, with the payroll company attributing some of the decline in employment to Superstorm Sandy, which they estimate cost the nation 86,000 jobs as businesses have shut down and consumer patterns in the region have been disrupted. To give perspective, 118,000 people represent 0.05 percent of the adult population in America, and does not alter the unemployment rate overall.

Mark Zandi, chief economist of Moody’s Analytics, said, “Superstorm Sandy wreaked havoc on the job market in November, slicing an estimated 86,000 jobs from payrolls. The manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm. Abstracting from the storm, the job market turned in a good performance during the month. This is especially impressive given the uncertainty created by the Presidential election and the fast-approaching fiscal cliff. Businesses appear to be holding firm on their hiring and firing decisions.”

Small businesses added 19,000 jobs, medium businesses added 33,000 jobs, and large businesses added 66,000 jobs. Manufacturing jobs dropped 16,000 while construction rose by 23,000, professional and business increased by 16,000, financial services by 13,000 and transportation and utilities improved by 22,000 jobs. Not all point to Superstorm Sandy as the lone culprit, rather indicate a continued weakness in the economy.

What happened to the small businesses?

While most major sectors saw growth, particularly in the service provider industry, manufacturing took a hit after months of gains. The largest portion of growth, according to the report, was in large businesses that employ over 500 workers, with small businesses still reserved in hiring. This news is problematic, as small businesses had been the leading sector in job growth in recent ADP reports, but are now slipping.

While manufacturing and small businesses took a sizable hit this month, construction gained 23,000 jobs which is no surprise as housing starts are at their best level seen in over five years.

Carlos A. Rodriguez, president and chief executive officer of ADP, said, “This month’s ADP National Employment Report shows an increase of 118,000 new jobs in November. Today’s report shows that year-to-date employment gains averaged 135,000 jobs per month,” and ADP reports the last six months have averaged 124,000 new jobs per month, revealing a decline in the recent indicator.

Change in nonfarm private employment (in thousands):
nonfarm employment

Historical Trend – Change in Total Nonfarm Private Employment (in thousands):
adp jobs report

Total Nonfarm Private Employment by Company Size (in thousands):
adp jobs report

Change in Total Nonfarm Private Employment by Selected Industry (in thousands):
adp employment change

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