US private sector hiring slows sharply in November

Total private hiring rose by just 67,000 net new positions in November.
Total private hiring rose by just 67,000 net new positions in November.PHOTO: AFP

WASHINGTON (AFP, REUTERS) - Hiring in the US private sector slowed sharply in November as small businesses, manufacturers, retailers and construction firms shed workers, according to data released on Wednesday (Dec 4).

The monthly report from payroll services firm ADP did not bode well for a more closely watched official employment report due out Friday. The two are frequently out of step, however.

Total private hiring rose by just 67,000 net new positions in November, marking the weakest pace in seven months and the third straight slowdown in hiring.

Economists had expected an increase of 175,000, or nearly three times as much.

"The job market is losing its shine," said Mark Zandi, chief economist at Moody's Analytics, which jointly produces the ADP report.

"Manufacturers, commodity producers, and retailers are shedding jobs. Job openings are declining and if job growth slows any further unemployment will increase," he said in a statement.

With the US experiencing a record 11-year expansion, economists are watching for signs the jobs engine is beginning to sputter.

Businesses, skittish due to the US-China trade war, may cut back on hiring which could eat into consumer spending, a mainstay of the US economy.

The stronger service sector added a net 85,000 positions as health care and professional services industries provided the bulk of gains, according to the report.

But the workforce among goods producers, including the oil sector, shrank by 18,000 positions, the sixth monthly decline this year.

And the trade, transportation and utilities sector shed 15,000 jobs.

Ian Shepherdson of Pantheon Macroeconomics notes that the data did not reflect the General Motors workers who returned to their jobs after a 40-day strike, because the automaker does not use ADP to process its payroll.

As a result, Friday's government employment report likely will be stronger than ADP, but even so there was no indication a jobs market rebound would occur soon, he said.

Forecasts had appeared high "but this is grim", Mr Shepherdson said in a note to clients.

"Unfortunately, it is consistent with the message from business surveys and other leading indicators."

The US Labor Department's more comprehensive non-farm payrolls report out on Friday includes both public and private sector employment.

Economists polled by Reuters are looking for US private payroll employment to have grown by 175,000 jobs in November, up from 131,000 the month before. Total non-farm employment is expected to have risen by 180,000 after climbing by 128,000 in October.

The unemployment rate is forecast to stay steady at the 3.6 per cent recorded a month earlier.