Private sector adds 110,000 jobs, but unable to reverse unemployment rate

NJBIZ STAFF//November 2, 2011//

Listen to this article

Private-sector companies added 110,000 jobs in October, according to the latest National Employment Report prepared by Automatic Data Processing, released this morning.

Businesses with less than 50 employees added 58,000 positions, while companies employing between 50 and 499 added 53,000 positions. Jobs at large companies, with 500 or more employees, decreased by 1,000. Additionally, numbers for September were revised upward to reflect an increase of 116,000 jobs — a 25,000-job improvement over the preliminary number of 91,000.

The numbers are about what one forecaster had expected.

“The increase is similar in size to increases in recent months,” said Joel Prakken, chairman of Macroeconomic Advisers LLC, which produces the monthly report with Roseland-based ADP. “It is consistent with the recent modest growth in the economy, but not enough to push the national unemployment rate down.”

Prakken said employment would have to rise by 130,000 for the rate to hold the line, and by 135,000 to push down the unemployment rate.

“As the population grows, the number of people who would like to work grows,” he said. “I think the unemployment rate will only be a little lower a year from now. It’s not going to be a seller’s labor market.”

Patrick J. O’Keefe, director of economic research at J.H. Cohn, of Roseland, said he expected the employment numbers would have been up a little more robustly than was the case.

“The ADP count has been up for the past 21 months, and it’s positive that we are seeing continuing progress — but the pace of job growth remains very weak,” O’Keefe said. “It was a slow, almost grudging month. I was also surprised that manufacturing declined for the third consecutive month. The manufacturing data we received indicated that overall activity picked up, but it didn’t translate into jobs.”

The report showed the service-providing sector added 114,000 jobs, while finance created 1,000 positions. The goods-producing sector lost 4,000 jobs, while construction was down 1,000 jobs and manufacturing down by 8,000.

“October’s job growth came exclusively from the services sector,” said Gary C. Butler, CEO of ADP, in prepared remarks. “Such a result explains the growth in professional and business services employment. It also reflects manufacturers’ uncertainty around investment and hiring. Nevertheless, we are seeing a better balance between small- and medium-sized business job growth compared to previous months.”

The report is derived from payroll data, and measures the change in total nonfarm, private employment each month. The federal Bureau of Labor Statistics is to release its jobs report Friday.