NEW YORK (Reuters) - The U.S. labor market improved in November, with private sector job losses declining for the eighth straight month and employers planning fewer layoffs, separate reports showed on Wednesday.
Although employers are still shedding jobs, economists said the figures suggest the United States is on track to start adding jobs next year.
A recovery in the labor market is considered key to a revival in U.S. consumer spending, which has typically accounted for roughly 70 percent of the country’s economic activity.
The Federal Reserve also saw glimmers of hope in the labor market in its latest Beige Book region-by-region assessment of the U.S. economy. The U.S. central bank said on Wednesday the economy is improving modestly, with little cause to worry about inflation, and said labor markets are stabilizing, although they remain weak.
According to the ADP Employer Services report on Wednesday, U.S. private employers shed 169,000 jobs in November, down from 195,000 in October. Despite the decline in job losses, the November figure topped economists’ median estimate for a loss of 155,000 jobs, according to a Reuters poll.
ADP’s October figure was revised from an original report of a loss of 203,000 jobs. ADP’s report is jointly developed with Macroeconomic Advisers LLC.
The ADP figures are seen by some analysts as a proxy for the federal government’s closely watched monthly report on non-farm payrolls, which is due out on Friday. That report on both private and public employment is also expected to show fewer job losses, though unemployment is seen remaining above 10 percent.
“Civilian jobs declined substantially in November, although at their slowest rate in a year-and-a-half,” said Steven Wood, chief economist at Insight Economics in Danville, California.
“Moreover, the decline was substantially less than the job losses that were experienced in March 2009, which were horrific. The magnitude of the job losses has progressively diminished over the past eight months. If this trend were to continue, the job losses would end sometime early next year,” he said.
In another sign that corporate work force cuts are tapering off, the number of planned layoffs at U.S. firms shrank in November to the lowest level in nearly two years, according to a report by global outplacement consultants Challenger, Gray & Christmas Inc.
Employers announced 50,349 planned job cuts in November, the fewest number of planned job cuts since 44,416 in December 2007, according to the report.
November planned job cuts were down 72 percent from November 2008, which at 181,671 was the worst month of 2008, according to the report.
Since July 1, employers have announced an average of 69,252 job cuts per month, compared with a monthly average of 149,446 in the January through June period.
“Most industries are seeing job cuts subside. Barring any unexpected shocks to the economy, we appear to be coming out of the woods when it comes to downsizing,” said Challenger, Gray’s chief executive, John Challenger.
There was little reaction to the data in U.S. stocks, bonds and currency markets on Wednesday.
Markets are awaiting Friday’s Labor Department report on the monthly payrolls data, which is forecast to show the loss of another 130,000 jobs in November. That would be the smallest decline since July 2008 and would mark the 23rd straight monthly drop in payrolls.
The unemployment rate is forecast to be unchanged at a 26-1/2 year high of 10.2 percent.
The Federal Reserve’s overview of the economy on Wednesday was largely positive, but gave it little reason to move off from its ultra-low interest rates designed to stimulate growth.
The Fed, in its Beige Book report, said eight of its 12 districts reported some pick-up in economic activity since the last report on October 21.
The remaining four — Philadelphia, Cleveland, Richmond and Atlanta — reported conditions little changed or mixed, the Fed said.
Commercial real estate and construction, however, ran counter to the trend of moderate pick-up, the Fed reported. Residential real estate markets, on the other hand, were somewhat improved from very low levels, though house prices were flat or declining modestly, contacts told the Fed.
In other data on the housing market on Wednesday, U.S. mortgage applications nudged higher last week as interest rates fell, according to the U.S. Mortgage Bankers Association.
Interest rates on 30-year fixed-rate mortgages, the most widely used loan, fell for a sixth straight week, remaining below the 5.0 percent level that is widely viewed as a psychological tipping level, the trade group said.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.79 percent, down 0.03 percentage point from the previous week, the lowest since the week ended May 15.
The rate remained above the all-time low of 4.61 percent set in late March and well below the year-ago level of 5.47 percent.
Last month the Obama administration extended an $8,000 first-time home buyer credit into next year and added a $6,500 credit for home owners buying a new residence.
Reporting by Nick Olivari in New York; Additional reporting by Mark Felsenthal in Washington and Ellen Freilich and Julie Haviv in New York; Editing by Leslie Adler