U.S. Jobs Report: What to Expect from December

The ADP employment report out today (Thursday) offered a glimpse of what to expect Friday in the December U.S. jobs report from the Labor Department.

The private sector created 215,000 new jobs in December, much more than the 133,000 jobs economists had expected, and a sharp increase from the previous month, according to the report.

The biggest gains were in the category of trade/transportation/utilities, which grew by 53,000.

Gains in construction hiring were also robust, with 39,000 positions added in December, the U.S. jobs report said.

The healthy showing in this struggling sector was attributed mostly to relief work after Hurricane Sandy. But the slow, yet steady recovery in the housing market also deserves some of the credit.

Medium-sized businesses led job creation, adding 102,000 new jobs. Large businesses followed with 87,000 new jobs.

Bucking the trend was manufacturing; the sector shed 11,000 positions while service providers increased headcount by 187,000, according to data from Moody's Analytics.

The strong showing was a surprise, given months of cautionary words from a bevy of analysts and the Congressional Budget Office.

The analysts and the CBO had warned the fiscal cliff saga would lead to massive job losses and cutbacks in business expansion, hiring and investment.

"The most surprising thing is that despite all the brinkmanship over the fiscal cliff drama and the debate about that, businesses didn't change their hiring plans. They seemed to slow up their investment spending but not on their hiring, so that's very, very encouraging," Mark Zandi, Moody's Analytics chief economist, told CNBC.

And Another U.S. Jobs Report Said...

Also released Thursday was a U.S. jobs report on weekly initial claims for state unemployment benefits for the week ending Dec. 29.

The Labor Department report showed an increase of 10,000 in claims to a seasonally adjusted 372,000. The numbers are expected to be revised in the weeks ahead because nine states estimated numbers for the week, instead of doing exact calculations, due to the Christmas and New Year's holidays.

The prior week's figures were also revised upward by 12,000.

"The underlying claims trend is still really low. There's a lot of volatility this time of year. Job destruction is really not a problem right now. It's really hiring that's the issue," Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, FL, told Bloomberg News.

A better read on the employment front, the less-volatile four-week moving average, rose 250 to 360,000.

What to Expect in Friday's U.S. Jobs Report

According to a Reuters' survey of economists, employers are projected to have added 150,000 jobs in December, just slightly higher than the 146,000 logged in November.

A separate survey predicts 140,000 jobs were added in December, with the unemployment rate ticking up to 7.8% from 7.7%, MarketWatch reports.

Whatever the numbers, they are expected to be skewed due to Hurricane Sandy and temporary holiday hiring.

From January-November 2012, the number of jobs added each month averaged 151,000, not enough to lower the unhealthy unemployment rate.

And whatever the numbers show, they will not reflect the scores of workers sidelined for so long they have simply given up and may never return to work.

Some 3.25 million people continue to collect jobless benefits, another 2.07 million continue to claim extended unemployment benefits, and millions more have exhausted benefits and have fallen off the unemployment radar.

Whatever the gains or losses, the employment picture is still fragile. Despite the rushed and abbreviated fiscal cliff deal, many businesses remain shaken and risk-averse, given the uncertainties that lie ahead.

Businesses also face new health insurance requirements under Obamacare.

The healthcare law requires businesses that employ at least 50 full-time workers - or the equivalent, including part-time workers - to offer health insurance to those working at least 30 hours a week. Employers that do not provide the health insurance face a $2,000-per-worker penalty, excluding the first 30 employees.

While the mandate doesn't kick in until Jan. 1, 2014, employers are already making plans. Most will cut hours, limit headcount and squeeze more work out of fewer employees. Some may simply pay the fine, which could cost less than providing coverage.

"It will have a negative impact on job creation," in 2013, Moody's Mark Zandi told USA Today.

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