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Ahead of Wall Street - December 7, 2012

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Friday, December 7, 2012

This morning’s November jobs report likely wouldn’t carry as much punch as this key measure of the labor market usually does. And the reason for that is quite simple – the government agency says that Sandy didn’t have a material impact on the jobs numbers in November. Given what we have seen in the weekly Jobless Claims data and the jobs numbers from ADP earlier in the month, this claim doesn’t make much sense. What this means is that today’s numbers will most likely get revised down next month.
That caveat aside, this is a fairly good report, broadly in-line with the monthly jobs trend of recent months. We got a monthly jobs tally of 146K, significantly better than expectations of about 80K. The revision trend was on the negative side, with October revised down to 138K from 171K and September lowered to 132K from 148K. The unemployment rate edged down 7.7% from 7.9% the month before.
Private sector jobs totaled 147K in November, below October’s 189K level (the October negative revision was entirely on the government jobs front). The November gains were concentrated in retail, professional services, and healthcare. Goods producing sectors lost 22K jobs during the month after gains of 15K in October, while service providing sectors added 169K during the month, roughly in-line with the 171K added the month before. Notwithstanding BLS’s claim of no Sandy effects, construction jobs were down 20K in November compared to gains of 15K the month before.
Today’s report shows that the average monthly jobs tally has been fairly stable in the last two years. The year-to-date monthly tally has averaged 151K, not much different from the 153K average monthly gain in 2011. While this is quite an underwhelming performance for the economy, it does show that negative backdrop of ‘Fiscal Cliff’ related uncertainty has not had much of a dampening effect on hiring trends. And that has to count as a positive in these times of uncertainty.
Sheraz Mian
Director of Research

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