Sandy, cliff point to bleak November US jobs data

The powerful storm that landed a blow to the US economy last month and worries over the fast-approaching "fiscal cliff" point to a bleak November reading from the Labor Department on Friday. Superstorm Sandy, which pummeled the northeastern coast in late October and early November, shutting down New York and other major cities, was expected to slash job creation in half. "The November payrolls data will be distorted by the effects of Superstorm Sandy," said Patrick O'Hare at Briefing.com. On Thursday, the Labor Department's weekly report on unemployment insurance claims showed first-time claims, a sign of the pace of layoffs, fell back to a more normal 370,000 last week after three weeks of elevated readings in the aftermath of Sandy. The latest week's claims data does not feed into the Labor Department's November report, which is based on numbers collected earlier in the month. The prior claims had climbed almost by 100,000 within two weeks of Sandy's landfall, said Lindsey Piegza of FTN Financial. "There will likely be a profound, negative impact on November payroll creation shaving up to 50 percent off last month's gains," Piegza said. In October, the US economy added 171,000 jobs, still below the 10-month average of 157,000, while the unemployment rate ticked up to 7.9 percent from 7.8 percent in September due to an increase in the labor force. For November, analysts on average are forecasting 90,000 net new jobs and the jobless rate at 8.0 percent. The fast-approaching "fiscal cliff," the combination of sharp federal government tax increases and spending cuts due in January, has also kept businesses cautious about adding jobs. Concerns are rampant that politicians will fail to find a compromise on longer term budget-deficit reduction to avoid the fiscal shock that economists say will jolt the economy back into recession. According to a private-sector survey by Challenger, Gray & Christmas released Thursday, job cuts increased for the third consecutive month in November as corporate employers announced plans to lay off more than 57,000 workers worldwide. That included the 18,500 employees of Twinkie-maker Hostess Brands, the national bakery which filed for bankruptcy. The Challenger data suggests that announced corporate layoffs are rising and rising faster than any seasonal pattern can account for, warned Robert Brusca at FAO Economics. On Wednesday, payrolls firm ADP reported business hiring slowed to 118,000 jobs in November from 157,000 in October, estimating Superstorm Sandy had sliced 86,000 jobs off payrolls. Earlier in the week, the Institute for Supply Management reported employment in the manufacturing and services sectors took a hit in November. "The lack of meaningful progress on the jobs front means the Fed will likely announce new stimulus measures at next week's meeting," said Sal Guatieri of BMO Capital Markets. The central bank will hold its last policy-setting Federal Open Market Committee meeting of the year on Tuesday and Wednesday. Fed Chairman Ben Bernanke has highlighted that the unemployment rate remains "well above" what Fed officials want to see, justifying maintaining a loose monetary policy. With the jobs market still weak, the FOMC is expected to push ahead with more outright bond purchases to push down long-term interest rates when it meets.