Edging away from the cliff? Business hiring up
Washington - Business hiring is holding up, allaying concerns about an economic downdraft in the face of a looming fiscal cliff.
Companies added an average 121,000 workers a month in the third quarter, up from 88,000 in the second quarter, according to Labor Department figures released last week. Total payrolls, including government, increased an average 146,000 a month, compared with 67,000 in the prior period.
"We're not seeing a further loss of momentum, and that's a very important positive," said Bruce Kasman, chief economist for JPMorgan Chase in New York.
A pullback in business investment had fanned concerns that companies would begin to pare hiring in anticipation of $600 billion in government spending cuts and tax increases at the start of 2013. The Congressional Budget Office has warned the economy will fall into recession if Congress allows the fiscal squeeze to go ahead.
The jobs numbers suggest the economy is expanding at a "trend-like pace" of around 2 percent, Kasman said. That would be in line with the 2.2 percent average quarterly growth rate of gross domestic product since the 18-month recession ended in June 2009.
Job gains have averaged 146,000 a month so far this year, compared with the 153,000 average last year.
In an effort to speed up the recovery, the Federal Reserve last month announced a third round of asset purchases and extended its horizon for near-zero interest rates at least through the middle of 2015.
Arne Sorenson, president and chief executive officer of Marriott International Inc., described the outlook for business in the United States and Canada as "steady as she goes" in an Oct. 4 conference call with analysts.
"We're now sort of thinking 2-percent-ish GDP growth for next year," said Sorenson, whose Bethesda, Md.-based company is the largest publicly traded U.S. hotel chain.
Confidence is growing at automakers, including General Motors, as cars and light trucks sell at the fastest pace in four years.
"We continue to be encouraged by positive signs from the housing sector, lower jobless claims, higher consumer sentiment and higher consumer spending," Kurt McNeil, GM's vice president of U.S. sales, said on a conference call on Oct. 2.
Toll Brothers, the largest U.S. luxury-home builder, reported a better-than-estimated profit and an increase in revenue for its third quarter ended July 31.
"Rising home prices have caused many homeowners to once again feel more comfortable with their net worth, which in turn fuels the economy's expansion, which then spurs greater demand for housing," Robert Toll, chairman of the Horsham, Pennsylvania-based company, said in an Aug. 22 conference call with analysts.
Growth in developing East Asia, which excludes Japan and India, will probably ease to 7.2 percent this year from 8.3 percent in 2011, the Washington-based World Bank said in a report Monday. That is the slowest pace since 2001, according to World Bank data, and lower than a forecast in May of 7.6 percent.
The biggest surprise in the U.S. jobs report for September was a drop in the unemployment rate to 7.8 percent, the lowest since January 2009, from 8.1 percent in August and 8.5 percent at the end of last year. The median forecast of 88 economists surveyed by Bloomberg prior to the report was for an 8.2 percent rate. No economist projected joblessness below 8 percent.
Employment, as measured by a survey of households, expanded 873,000. During the last three months, it's risen an average 186,000, not much different from the growth of payrolls reported by employers during that period.
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