* Superstorm Sandy seen disrupting job growth trend
* Nonfarm payrolls expected to rise 93,000 in November
* Unemployment rate expected to hold steady at 7.9 percent
* Average hourly earnings seen rising, workweek steady
By Lucia Mutikani
WASHINGTON, Dec 7 Superstorm Sandy likely put a
dent in U.S. employment growth in November, temporarily
interrupting a recently established trend of modestly rising
Nonfarm employment is forecast to have increased by a paltry
93,000 jobs last month after advancing by 171,000 in October,
according to a Reuters survey of economists. The unemployment
rate is seen holding steady at 7.9 percent.
November's anticipated job count would be the smallest in
five months. Economists said the slowdown will reflect the
effect of the late-October storm, which battered the densely
populated East Coast. A snap back is expected in December.
"Sandy is going to depress payroll employment growth in
November, but I expect it to rebound in December," said Gus
Faucher, a senior economist at PNC Financial Services in
Expectations for a December bounce back were bolstered by
data on Thursday that showed first-time applications for state
unemployment benefits dropped to the top end of their pre-storm
range in the week ended Dec. 1.
The Labor Department will release the November employment
report at 8:30 a.m. (1330 GMT) on Friday. Earlier reports have
shown that Sandy restrained consumer spending and industrial
production in October, while spurring a drop in wages.
Payroll growth averaged 170,000 per month over the three
months before the storm struck, and economists expect job
creation to pick up to around that level in the coming months.
That should be enough to push the jobless rate lower over
time, but only slowly. Economists say roughly 200,000-250,000
jobs per month are needed to really make headway.
Businesses have been reluctant to spend and hire, fearful
the government may fail to prevent the $600 billion in automatic
tax hikes and government spending cuts set to take hold at the
start of next year. The debt crisis in Europe has also weighed.
"Once Washington policymakers resolve the near-term fiscal
and other policy challenges that have undermined business
confidence, we expect the pace of recovery, and job growth to
begin to accelerate next year," said Lewis Alexander, chief
economist at Nomura Securities in New York.
Policymakers at the Federal Reserve who meet on Tuesday and
Wednesday are not expected to take much notice of the report,
given the expected storm-related distortions.
TIGHTER FISCAL POLICY IN 2013
Economists said an anticipated tightening of fiscal policy
next year, even if a deal is reached to avoid completely going
over the fiscal cliff, provides ample reason for the U.S.
central bank to maintain its ultra-easy monetary policy stance.
"The Fed will want to do what it can to keep monetary policy
easy. They would not want to do anything right now that would be
a monetary tightening," said Jerry Webman, chief economist at
Oppenheimer Funds in New York.
Relentless labor market weakness led the Fed in September to
launch a program to buy $40 billion worth of mortgage-backed
securities every month to drive down borrowing costs.
That is on top of a program dubbed "Operation Twist" in
which it was re-weighting securities it holds toward longer
maturities. Twist expires at the end of this month and
economists expect the Fed to replace it with a program that buys
government bonds with newly created money.
All of the meager jobs gains in November are expected to be
in the private sector, with government employment seen falling
Within the vast private services sector, retail and
transport payrolls are expected to have been hit by the storm.
In contrast, temporary help hiring likely got a boost from
storm-related clean-up efforts.
In the goods-producing sector, manufacturing employment was
probably flat, while post-storm rebuilding likely gave
construction payrolls a lift. A rise in homebuilding, thanks to
the Fed's accommodative policy stance, is another reason to look
for an increase in construction jobs.
Average hourly earnings are expected to have edged up after
slipping in October. In the 12 months to October, average hourly
earnings rose just 1.6 percent, the lowest on records dating to
While the length of the average workweek is expected to have
held steady at 34.4 hours in November, the storm could have
forced some companies to shorten hours.
"The economy has yet to enter a self-reinforcing virtuous
growth cycle whereby improvements in purchasing power drive
greater spending and hiring," said Julia Coronado, chief North
America economist at BNP Paribas in New York.
"Much greater strength in hiring is required over a longer
period to deliver stabilization in wage growth."