NEW YORK—A report released Wednesday shows that the U.S. economy added 110,000 private-sector jobs last month, higher than estimated.
The closely followed ADP National Employment Report said 110,000 jobs were created, greater than the 101,000 new jobs estimated by leading economists. In addition, ADP increased the previously reported number of jobs added in September by 25,000.
ADP’s report, as well as the U.S. Department of Labor’s report—to be released on Friday—contains information on both public and private sector jobs and will serve as a gauge on the state of the nation’s economy. The report could determine how retail sales perform in the upcoming holiday shopping season.
Past fears of a second recession waned after employers showed moderate jobs growth, and planned layoffs fell in number.
A separate report by outplacement firm Challenger, Gray & Christmas, Inc.—released Wednesday—shows that planned layoffs by private sector companies fell to 42,759 in October, down more than 60 percent from the number of layoffs announced in September, which was 115,730. The two sectors that saw the most layoffs were financial and government.
“Most of the government cuts this year were at the state level. We have yet to see the full impact of mandated federal spending cuts. Anticipated cuts at the U.S. Post Service alone could result in more than 200,000 job cuts,” said CEO John Challenger in its report.
“Meanwhile, the European debt crisis is wreaking havoc on Wall Street. Commercial banks and mortgage lenders are still unstable in the wake of the housing collapse.”
While October figures were a boost to investors, 2011 was definitely a year of downsizing by companies in almost all sectors. According to Challenger’s report, year-to-date planned layoffs totaled 521,823.
Fed Stands Pat
Federal Reserve Chairman Ben Bernanke met with his Open Markets Committee (FOMC) Wednesday to discuss the Fed’s outlook on the nation’s economy and any plans for future growth.
The FOMC kept the federal funds rate in the range of zero to 0.25 percent and maintained its current strategy of favoring long-term bonds. In addition, the Fed lowered its forecast for 2012 economic growth while stating that the nation’s unemployment rate would decrease to around 8.5 percent by later 2012.
The revision of economic growth downward is mainly due to continued high unemployment rates and risks from the European debt crisis.
There had been two rounds of quantitative easing, to mixed results. Although the FOMC kept open the possibility of another stimulus, many economists argue that another round is unlikely to make a difference.Interest rates are already at historic lows, a level that should promote lending and investing. However, banks have been reluctant to lend, and consumers have been equally as conservative—opting instead to stash money away in savings or pay back credit card debt.
In addition, despite the low mortgage rates, the market is still laden with unsold homes, with many consumers reluctant to make new purchases due to a lack of confidence in income/job stability and the economic recovery.