Just call it a month in which the private-sector job market treaded water: It lost 203,000 jobs in October, following a revised 227,000 reduction in September, according to data compiled in the ADP National Employment Report. September's original loss estimate was 254,000. Economists surveyed by Bloomberg News had expected private employers to cut 200,000 jobs in October.

Separately, job-placement firm Challenger, Gray & Christmas said job cut announcements by U.S. employers fell to 55,679 in October, 16 percent lower than in September, CNMoney.com reported Wednesday.

ADP noted that the 203,000 private payroll cutback was the seventh straight monthly decline. Nevertheless, ADP added, "despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least a few more months."

The job loss totals in October by business size were: 53,000 (large), 75,000 (medium), and 75,000 (small).

Further, the services sector -- formerly a U.S. strength during the recent economic expansion -- lost 65,000 jobs in October. The goods-producing sector slashed 117,000 jobs and manufacturing shed 65,000 positions. The construction sector eliminated 51,000 jobs, its 33rd consecutive monthly decline, and brought total construction jobs lost since the January 2007 peak to 1.7 million.

Investors should monitor monthly job reports because job creation is positively correlated with corporate revenue and earning gains. And as corporate earnings go, so goes the U.S. stock market.

Job creation also is the key to consumption, which contributes greatly to U.S. GDP. However, given a decade of overconsumption and stagnant incomes in many job classifications, few economists expect spending patterns to return to the home equity/refinance-distorted, cash-flush years of the housing bubble. Nevertheless, many economists do expect both consumer spending and business investment to trend slightly higher in the quarters ahead.

Economic Analysis: Basically, the ADP October report on private-sector employment came in about as expected. Still, the optimist would see the continuing downtrend in job layoffs, which ADP noted. One of the ironies of the U.S. economy is that as it becomes more productive per employee, it takes fewer and fewer employees to perform the same tasks. This has the effect of reducing job gains and lengthening the recovery time to full employment. And that makes the task of policymakers and executives more difficult.

Even so, they must remain focused on job creation: The U.S. economy needs to create 150,000 to 200,000 jobs every month to lower unemployment. Also, investors should keep in mind that the more-telling job statistic, containing both private- and public-sector job data, is the U.S. Labor Department's monthly nonfarm payroll report, and the October data will be released Friday, Nov. 6 at 8:30 a.m. EST. It's expected to show a 175,000-job decline in October after a 263,000 loss in September, according to a Bloomberg News survey of economists.


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