Private hiring pickup forecast for November

[December 03, 2010]  WASHINGTON (AP) -- Private employers probably revved up hiring in November as signs grow that the economy is gaining momentum. Yet, few expect a change in the 9.6 percent unemployment rate.

After a sharp slowdown in the spring and a tepid rebound in the summer and fall, the economy is flashing signs of stronger growth in the final months of the year. That was evident in economic reports out earlier this week.

Factories are producing more. Auto sales are rising. A private report earlier this week showed the strongest private-sector job gains in three years. And applications for initial unemployment benefits hit a two-year low in November.

All that is making some economists more optimistic about Friday's report on November employment.

Nigel Gault, chief U.S. economist at IHS Global Insight, predicts that private companies added a net total of 180,000 jobs last month -- a bump-up from his earlier forecast of 160,000 new jobs. In October, private companies added a net 159,000 jobs. That marked a spurt of job creation after hiring had all but stalled pretty much all summer.

Two pillars of the economy -- jobs and consumer spending -- appear on the upswing. "We are getting some hints of the virtuous cycle we want to see where employment and consumer spending move up together," Gault said.

The number for job growth is likely to be a little lower after subtracting declines in government payrolls. Gault and other economists on the optimistic end expect the overall economy added 170,000 net jobs last month. Still, the consensus forecast is for an overall gain of 145,000. Last month, the economy added a total of 151,000 jobs.

Still, even if the optimistic job projections for November prove accurate, they won't be strong enough to drive down the unemployment rate. Most economists think the jobless rate will be unchanged in November. That would mark the 19th straight month that the unemployment rate topped 9 percent, the longest stretch on records going back to 1948. The previous record stretch was set in the early 1980s.

"Even in a labor market that is gradually healing, the improvement won't happen in a straight line," said Michael Feroli, economist at JPMorgan Chase Bank.

The economy would need to consistently add 200,000 to 300,000 a month to make a noticeable dent in the unemployment rate, analysts say. It could take until near the end of this decade to drop the unemployment rate to a more normal 6 percent, they say.

Yet, the economy is moving in the right direction.

Gault and other analysts predict the economy will grow at a 3 percent pace in the October-December quarter, up from a 2.5 percent growth rate in the July-September quarter.

Strong sales from reports from the nation's retailers on Thursday are especially encouraging. Consumer spending powers some 70 percent of the national economy.

Stores reported sales gains in November that topped Wall Street expectations included Costco Wholesale Corp., Target Corp., the owner of Victoria's Secret and teen retailer Abercrombie & Fitch. The results are boosting hopes that shoppers will spend more during the holiday season.

The International Council of Shopping Centers' index reported a 5.8 percent gain. It marked the biggest increase since March when a quirk of the Easter calendar resulted in a 9 percent gain. Aside from that month, the last time retailers reported such a big increase was in September 2006, when it registered 6.2 percent increase.

Another report out Thursday showed that November marked a two-year low for the number of people applying for initial unemployment benefits, suggesting that the tight job market may be easing at last. The four-week moving average of jobless claims, which smooths volatility fell to 431,000 last week.

Applications for unemployment benefits have fallen below 450,000 in each of the past four weeks, after hovering above 450,000 for most of the year. That's a big improvement from March 2009, when applications peaked at 651,000.

[Associated Press; By JEANNINE AVERSA]

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