Private sector job creation in December blows away expectations
Private sector jobs were created in December at a pace more than doubling expectations, according to a report released Wednesday. Another jobs report indicated that job losses dropped to the lowest level in 10 years. The two reports submitted ahead of the Labor Department jobs report due Friday may show that the U.S. labor market may have bottomed out at last, but a long uphill climb lies ahead.
Service sector lead the way in job creation
Private sector jobs in the U.S. increased by 297,000 in December, blowing away economists’ expectations. The report issued by the payrolls firm Automatic Data Processing showed that the service sector — industries such as health care, finance, education and communications — led the way in job creation with 270,000 new hires in December. The ADP report said the production sector–manufacturing and construction jobs — added 27,000 new hires in December. Economists surveyed by Bloomberg had estimated a December hiring increase of 100,000 jobs.
Fewest job losses in 10 years
While private sector job creation surged in December, a report from Challenger, Gray & Christmas, a company that helps laid off workers find jobs, said that employers cut 59 percent fewer jobs in 2010 than in 2009. According to the report it was the fewest job cuts since 1997. The report also said job cuts dropped 34 percent in December from November to 32,000, the lowest tally of monthly job losses since 2000. Bloomberg reports that the Labor Department jobs report due Friday will show that the U.S. unemployment rate in December dropped to 9.7 percent.
U.S. labor market has a long way to go
If private sector job creation continues to accelerate, economists predicts that a subsequent increase in consumer spending could help U.S. economic recovery find another gear. But Daily Finance suggests that the numbers should be taken with a grain of salt. One month of strong jobs data does not signal the beginning of a trend. Plus, despite exceeding low expectations, job creation has a long way to go. Even at an accelerated rate it will take years, not months, to recover from a recession that left the U.S. economy with a deficit of 15-to-17 million full-time jobs.