Storm hits hiring in November but service sector grows

Wed Dec 5, 2012 12:42pm EST
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By Edward Krudy

NEW YORK (Reuters) - Private-sector hiring took a hit in November due to the impact of storm Sandy on the northeastern United States but the country's huge services sector continued to expand.

The ADP National Employment Report, which is closely watched as it comes two days ahead of the government's monthly national employment report, showed that the private sector added 118,000 jobs during the month, below expectations for a gain of 125,000.

The report largely underpinned economists' forecast for a weak reading in the Labor Department payrolls report on Friday. Economists expect the economy added 93,000 jobs in November, down from 171,000 the month before, according to a Reuters poll.

"It's close to what the market was expecting. If Friday's employment report from the U.S. Labor Department comes in similar to this, that would be a good outcome," said Terry Sheehan, economic analyst at Stone and McCarthy Research Associates in Princeton, New Jersey.

Wednesday's raft of data, which also included better-than-expected factory orders and productivity, presented a mixed picture of the U.S. economy. That was in part a reflection of cross-currents from Sandy, as well as difficult budget negotiations in Washington aimed at averting the "fiscal cliff," a series of automatic spending cuts and tax hikes next year.

A report on the U.S. services sector showed a similar slowing in hiring during the month. But forward-looking indicators pointed to faster growth as a rise in new orders and business activity helped offset a slowdown in employment and prices.

The Institute for Supply Management said its services index rose to 54.7 last month from 54.2 the month before. The reading topped economists' forecasts for growth to 53.5, according to a Reuters survey. In the report, 50 marks the divide between growth and contraction.

"The much larger service side of the U.S. economy remains relatively healthy," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.   Continued...

Job seekers speak to recruiters at a job fair sponsored by the New York Department of Labor in New York, June 7, 2012. REUTERS/Keith Bedford