Financial FAQs

Just maybe, we are turning the corner on the jobs picture.  Payroll jobs finally returned to positive territory as the impact of layoffs of temporary Census workers has dwindled and the private sector is strengthening.  Payroll employment in October rebounded 151,000—159,000 private payroll jobs less 8,000 government jobs lost. And private employment in September was revised to a 107,000 increase.

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And, as a sign that consumers are consuming more, service-providing jobs added most to payrolls–advancing 154,000 after an 111,000 increase in September.  We are now a service economy, as many manufacturing jobs have moved offshore. Within services for October, temp help gained 35,000; health care added 24,000 jobs; and retail trade jumped 28,000.  Goods-producing industries edged up 5,000 after a 4,000 dip in September.  In the latest month, manufacturing was little changed, slipping 7,000; construction rose 5,000; and mining increased 8,000.

More good news was that the average workweek for all workers edged up to 34.3 hours from 34.2 hours in October, marginally topping expectations for 34.2 hours. The workweek has been on a rebound since mid-2009.  Between the gains in temp workers and the average workweek, one should expect a pickup in hiring as these two series typically rise before overall employment, as I said in this week’s Popular Economics Weekly. 

Could this mean that small businesses are in fact hiring again? “The depression in small business pretty much explains everything in the weakness of this cycle,” said Ian Stepherdson of High Frequency Economics. “I reckon in the last cycle they accounted for two-thirds of all new job creation. Not only are they big, they are better job-creation engines than big companies, which are more inclined to do their new hiring offshore.”

There was some confirmation in October’s National Federation of Independent Business small business optimism index rise of 2.7 points, to a reading of 91.7. However, their optimism index remains stuck in the recession zone established over the past two years and not a good reading. But job creation plans did turn positive and job reductions ceased, , according to the NFIB.

Service sector activity in October is following the manufacturing sector surge we reported on last week, according to the ISM’s non-manufacturing index, which rose 1.1 points in October to 54.3.  This survey of ISM members covers services, construction, mining, agriculture, and forestry.

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New orders show special monthly acceleration, at a 56.7 level for a nearly two point gain, as did backlogs orders moving back over 50 at 52.0 to indicate a month-to-month build. Rising orders and rising backlogs mean rising employment in coming months.

And, despite sluggishness in the latest home sales numbers, we may have seen the bottom in actual construction, another service industry. At a minimum, construction is no longer the sizeable drag on the economy that it had been during the recession. There is even the possibility that this sector will be a very mild positive for economic growth in coming months, says Econoday.

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The large pickup in service-sector employment, which now makes up almost 70 percent of U.S. business, is a sign that the U.S. economy is growing again. Gross Domestic Product has now grown 3 percent in 12 months, meaning both consumer and commercial demand is increasing which is why employers have to add to their payrolls.

Harlan Green © 2010