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ADP Says U.S. Companies Added 118,000 Workers in November

Dec. 5 (Bloomberg) -- Bloomberg's Michael McKee breaks down the ADP jobs report which found 118,000 jobs created in the month of November. He speaks on Bloomberg Television's "In The Loop."

Companies in the U.S. added fewer workers in November than a month earlier after superstorm Sandy battered the East Coast and temporarily shuttered some businesses.

The 118,000 increase in employment followed a revised 157,000 gain in October that was less than initially estimated, data from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 38 economists surveyed by Bloomberg projected a 125,000 rise in November. The report estimated that Sandy reduced payrolls by about 86,000.

Hiring plans were put off by companies in the mid-Atlantic, a three-state region that employs about 14 percent of U.S. workers, as they recovered from Sandy. Firms are also awaiting a solution by lawmakers in Washington to avoid automatic tax increases and budget cuts that raise the risk of recession in 2013.

“The manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm,” Mark Zandi, chief economist at Moody’s Analytics Inc., said in a statement. Moody’s produces the figures with ADP.

Aside from Sandy, “the job market turned in a good performance during the month,” Zandi said. “This is especially impressive given the uncertainty created by the presidential election and the fast-approaching fiscal cliff.”

Stock Futures

Stocks gains after the figures, with the Standard & Poor’s 500 Index rising 0.1 percent to 1,407.73 at 9:51 a.m. in New York.

Estimates in the Bloomberg survey ranged from 35,000 to 174,000. ADP initially estimated a 158,000 gain in October payrolls.

Goods-producing industries, which include manufacturers and construction companies, added 4,000 workers, today’s ADP figures showed. Construction employment increased by 23,000, while factory employment declined by 16,000.

Service providers added 114,000 workers.

Companies employing more than 499 workers increased payrolls by about 66,000 jobs. Medium-sized businesses, with 50 to 499 employees, added 33,000, and small companies took on 19,000, ADP said.

“Outside of Sandy, I think businesses are still hiring,” said Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburgh. “There’s underlying job growth that’s strong enough to employ new entrants into the labor force as well as some of those who lost their jobs going into the recession.”

Private Employment

This week’s Labor Department report may show private payrolls increased by 93,000 in November, while unemployment held at 7.9 percent, according to the Bloomberg survey median. Overall hiring including government jobs probably climbed by 87,000 last month after rising 171,000 in October.

Federal Reserve Chairman Ben S. Bernanke has said an agreement on reducing long-term federal budget deficits without abrupt tax increases and spending cuts would remove a barrier to growth.

“A plan for resolving the nation’s longer-term budgetary issues without harming the recovery could help make the new year a very good one for the American economy,” Bernanke said in a Nov. 20 speech.

Last month marked a break from the way ADP had calculated employment figures dating back to 2001. Today the group issued its second joint release with Moody’s of West Chester, Pennsylvania, while it had previously collaborated with Macroeconomic Advisers LLC of St. Louis.

Report Changes

The report now draws on data from 406,000 of Automatic Data Processing Inc.’s corporate customers, up from the 344,000 used in the prior method. Those customers employ 23 million workers, or more than 20 percent of all non-government staff, ADP said in press release announcing the changes on Oct. 24.

Additionally, ADP and Moody’s said the new methodology they developed will better align their figures with those from the Labor Department’s monthly payroll report. The methodology uses data from ADP customers, the Labor Department and the Federal Reserve Bank of Philadelphia’s Aruoba-Diebold-Scotti Business Conditions Index. ADP said its numbers should correlate most closely with the final, revised Labor Department figures, rather than those initially released at the beginning of the month.

To contact the reporters on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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