Bloomberg News

Sandy Probably Dealt Blow to U.S. Job Market in November

December 07, 2012

Sandy Probably Dealt a Blow to U.S. Labor Market in November

Sandy left about 8 million homes and businesses without power for days after making landfall in New Jersey on Oct. 29. Photographer: Victor J. Blue/Bloomberg

Employment probably slowed in November as the damage wreaked by superstorm Sandy set the U.S. labor market back, economists said before a report today.

Payrolls rose by 85,000 workers, the fewest since June, following a 171,000 increase in October, according to the median forecast of 90 economists surveyed by Bloomberg. The jobless rate may have held at 7.9 percent, the survey showed.

“Sandy was a temporary drag that reduced employment,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut. “Outside of that, we’ve seen a low level of hiring.”

Some employers may be reluctant to take on more staff until lawmakers come to agreement on how to avoid the more than $600 billion in tax increases and government spending cuts slated to take effect next year. For their part, Federal Reserve policy makers are focusing on the elevated unemployment rate as they consider whether to increase record stimulus.

The Labor Department’s report is due at 8:30 a.m. in Washington. Bloomberg payroll survey estimates ranged from increases of 15,000 to 145,000.

Gains in employment, rising home values and cheaper gasoline are helping boost Americans’ moods, other data may show at 9:55 a.m. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment in December held close to the prior month’s five-year high, according to the Bloomberg survey.

Share Prices

Stocks have gyrated this week as investors weigh prospects for a budget deal. The Standard & Poor’s 500 Index rose 0.3 percent yesterday, paring the loss for the week to 0.2 percent.

Private employment, which excludes government agencies, rose by 90,000 in November, less than half the prior month’s 184,000 increase that was the biggest since February, economists forecast today’s report will show.

Sandy left about 8 million homes and businesses without power for days after making landfall in New Jersey on Oct. 29. The 26 counties designated as major disaster areas after the storm had an average 1,301 labor force participants per square mile, about 30 times the average labor force density for the U.S. in 2011, according to the Labor Department.

Economists differ on how much Sandy depressed November payrolls. Nomura Securities International Inc. projected a hit of 45,000, Goldman Sachs Group Inc. estimated a reduction of about 50,000, while UBS Securities LLC and Deutsche Bank Securities Inc. put the fallout at 150,000.

Katrina Comparison

Based on comparisons with Hurricane Katrina in 2005, history suggests the “temporary hiring stall” will extend into December, after which employment should “meaningfully recover within a couple of months,” Joe LaVorgna, Deutsche Bank’s chief U.S. economist, said in a Nov. 26 note.

Citigroup Inc. (C:US) is among companies cutting payrolls. The New York-based bank announced this week it will cut more than 11,000 jobs and pull back from some emerging markets to drive down costs as revenue dries up.

On the brighter side, an early Thanksgiving may have boosted payrolls by about 75,000 last month, according to UBS projections as companies such as retailers took on extra staff sooner than normal.

Businesses that stepped up hiring for the holidays include Macy’s Inc. (M:US) The second-biggest U.S. department-store chain said it would add about 2,000 more seasonal workers than the 78,000 it hired last year. Toys ‘R’ Us Inc., the world’s largest toy retailer, reported plans to employ 45,000 temporary staff, up 5,000 from the 2011 season.

Post Recession

Through October, the U.S. had recovered 4.5 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.

At the same time, hiring and investment is being held back by concern about the so-called fiscal cliff, as well as the global slowdown in growth.

“We’re expecting the same sort of a slow-growth environment -- that’s our best view of 2013,” Fredrik Eliasson, chief financial officer of CSX Corp. (CSX:US), the largest eastern U.S. railroad, said on a Nov. 28 teleconference with analysts. “There are a lot of uncertainties out there in the world at this point between what’s going on here with the fiscal cliff and between Europe and China.”

Fed officials are considering whether to step up easing to stimulate the economy and trim the jobless rate, which prior to September exceeded 8 percent for 43 consecutive months, the longest stretch in monthly records going back to 1948.

“Although the economy continues to expand, we must grow faster if we are to put all of our jobless workers and idle businesses back to work,” William Dudley, president of the Federal Reserve Bank of New York, said in a Nov. 29 speech. He called the unemployment rate “unacceptably high.”

                       Bloomberg Survey

================================================================
                           Nonfarm  Private Unemploy  U of Mich
                          Payrolls Payrolls     Rate    Conf.
                            ,000’s   ,000’s        %    Index
================================================================
Date of Release              12/07    12/07    12/07    12/07
Observation Period            Nov.     Nov.     Nov.   Dec. P
----------------------------------------------------------------
Median                          85       90     7.9%     82.0
Average                         87       92     7.9%     82.1
High Forecast                  145      155     8.1%     84.0
Low Forecast                    15       20     7.9%     80.0
Number of Participants          90       50       88       66
Previous                       171      184     7.9%     82.7
----------------------------------------------------------------
4CAST                           75       95     7.9%     83.5
ABN Amro                        80       90     7.9%     82.0
Acciones y Valores              86     ---      8.0%     81.9
Action Economics               110      115     7.9%     82.0
Aletti Gestielle              ---      ---      7.9%     82.0
Ameriprise Financial            90       95     7.9%     82.5
Banca Aletti                   130      141     7.9%     81.0
Bank of the West               124      123     7.9%     82.0
Bank of Tokyo-Mitsubishi        40     ---      7.9%     ---
Banorte-IXE                    130     ---      7.9%     81.0
Bantleon Bank AG                85     ---      7.9%     81.5
Barclays                        50       55     8.0%     83.5
Bayerische Landesbank          107     ---      7.9%     ---
BBVA                           120      130     7.9%     82.4
BMO Capital Markets            120     ---      7.9%     83.0
BNP Paribas                     25       50     8.0%     82.0
BofA Merrill Lynch              60       70     8.0%     81.0
Briefing.com                    80       50     8.1%     82.0
Capital Economics               75     ---      7.9%     83.0
CIBC World Markets              87     ---      8.0%     ---
Citi                            80     ---      7.9%     80.0
ClearView Economics             75       82     8.1%     83.0
Commerzbank AG                 110      120     7.9%     83.0
Credit Agricole CIB             80     ---      8.0%     82.0
Credit Suisse                   70       70     8.0%     82.0
CTI Capital                     77     ---      ---      ---
Danske Bank A/S                125      135     7.9%     82.4
DekaBank                       100     ---      7.9%     84.0
Desjardins Group               110     ---      8.0%     82.5
Deutsche Bank Securities        25       35     8.0%     83.0
Deutsche Postbank AG           120     ---      7.9%     82.0
Exane                          115     ---      7.9%     80.0
First Trust Advisors            67       67     7.9%     83.0
FTN Financial                   20       25     8.0%     83.0
Goldman, Sachs & Co.            75     ---      7.9%     82.5
Hammer Partners SA              95     ---      7.9%     ---
Helaba                         100     ---      7.9%     82.0
High Frequency Economics        80     ---      8.0%     81.5
HSBC Markets                   125      120     7.9%     82.5
Hugh Johnson Advisors          110      125     7.9%     83.0
IDEAglobal                      75       90     7.9%     81.0
IHS Global Insight             100     ---      7.9%     82.0
Informa Global Markets          65     ---      7.9%     82.3
ING Financial Markets          145      145     7.9%     82.0
Insight Economics               25     ---      8.1%     83.0
Intesa Sanpaulo                 85     ---      7.9%     83.0
J.P. Morgan Chase              100      110     7.9%     80.0
Janney Montgomery Scott        112      128     7.9%     ---
Jefferies & Co.                 65       75     8.0%     84.0
John Hancock Financial         118     ---      7.9%     ---
Landesbank Berlin              100     ---      7.9%     81.0
Landesbank BW                   90     ---      7.9%     81.5
LCA Consultores                 79     ---      ---      ---
Lloyds Bank                     85       90     7.9%     82.0
Maria Fiorini Ramirez           80       90     ---      ---
Market Securities               58     ---      8.0%     ---
MET Capital Advisors            30       20     8.0%     ---
Mizuho Securities              125     ---      8.0%     82.0
Modal Asset                   ---        52     ---      ---
Moody’s Analytics               70      115     7.9%     82.5
Morgan Stanley & Co.            15     ---      7.9%     ---
National Bank Financial         90     ---      7.9%     81.0
Natixis                        100     ---      7.9%     82.0
Nomura Securities              145      155     7.9%     ---
Nord/LB                         85     ---      7.9%     82.0
OSK Group/DMG                  136     ---      7.9%     82.0
Oxford Economics               127      124     7.9%     ---
Paragon Research                62     ---      8.1%     ---
Pierpont Securities             60       75     7.9%     81.0
PNC Bank                       140      150     7.9%     ---
Prestige Economics             130      125     7.9%     ---
Raiffeisenbank International    50       70     8.0%     82.5
Raymond James                  110      115     7.9%     82.2
RBC Capital Markets             95      105     8.0%     81.0
RBS Securities                  75       80     7.9%     81.0
Regions Financial              116     ---      7.9%     ---
Renaissance Macro Research      50       60     8.0%     ---
Santander                       75     ---      7.9%     ---
Scotiabank                     100     ---      7.9%     82.0
SISR                            43       48     8.0%     ---
SMBC Nikko Securities           20       50     8.1%     80.0
Societe Generale               122      112     7.9%     82.6
Southern Polytechnic State      50       45     8.1%     ---
Standard Chartered             105      125     7.9%     83.5
Stone & McCarthy                75       80     7.9%     83.0
TD Securities                  105      112     8.0%     83.0
UBS                             50       60     8.0%     82.0
UniCredit Research             110     ---      7.9%     ---
University of Maryland         135      140     8.0%     83.0
Wells Fargo & Co.               65     ---      8.0%     ---
Westpac Banking Co.             70     ---      8.0%     ---
Wrightson ICAP                  50       50     8.0%     83.0
================================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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


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Companies Mentioned

  • C
    (Citigroup Inc)
    • $53.48 USD
    • -0.18
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  • M
    (Macy's Inc)
    • $60.1 USD
    • -0.46
    • -0.77%
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