Jobs Picture: Claims Fall, Job Creation Surges; Layoffs Ease

The news is all good for the jobs market so far in 2012: Separate reports Thursday showed a surge in private-sector job creation, a sharp drop in weekly unemployment claims and planned layoffs at their lowest level in six months.

AP

Though the December data flowing in is sensitive to seasonal revisions, the trend is moving in the right direction.

Private-sector jobs surged by 325,000, according to ADP and Macroeconomic Advisors, while the government said weekly jobless claims fell 15,000 to 372,000 — still at an elevated level but consistent with recent data showing a consistent if grudging turnaround.

Goods-producing businesses created 176,000 positions in the month, according to ADP's payrolls count, while the goods-producing sector rose 52,000 and manufacturing increased 22,000.

Economists had expected ADP to show 178,000 private jobs created in December, down from the 206,000 the report showed in November.

"This continues an acceleration in employment that began back in late summer, so it propagates an ongoing trend," Joel Prakken, chairman of Macroeconomic Advisors, told CNBC. "It also seems to be consistent with other elements that suggest improvements in the labor market."

Prakken conceded that seasonal distortions tend to elevate the December numbers, but there are solid signs that the jobs market is thawing.

"There is a sense here that these data are strengthening," he said.

But December 2010 also produced a huge ADP number — 297,000 jobs created — but the nonfarms payroll number a few days later disappointed the market. The government reported just 113,000 new jobs — ultimately revised up to 167,000 — that magnified seasonal problems with ADP's data.

"The ADP survey seems to have problems with the strong seasonality in the final month of the year," Paul Ashworth, chief US economist at Capital Economics in London, said in a note. "Some employers have an incentive to keep everybody on the payroll list for tax purposes through the year, even if they are no longer being paid. Firms then purge their payrolls at the end of the year, which creates a very strong seasonal effect."

For the government's weekly claims tabulation, it was the fourth drop in five weeks. The four-week average, which smooths fluctuations, declined to 373,250, the lowest level since June 2008.

When applications drop below 375,000 — consistently — they generally signal that hiring is strong enough to reduce the unemployment rate.

Applications have declined steadily over the past three months.

The four-week average fell 11 percent in 2011, evidence that companies are laying off fewer workers. But many employers have been slow to add jobs.

The reports come a day ahead of the Labor Department's monthly report expected to show 150,000 total jobs created in the public and private sectors.

In a related report, the number of planned layoffs at U.S. firms declined to its lowest level since June, suggesting ongoing improvement in the labor market although unemployment remains historically high, a report on Thursday showed.

Employers announced 41,785 planned job cuts last month, down 1.6 percent from 42,474 in November, according to the report from consultants Challenger, Gray & Christmas.

But December's job cuts were up from the same time a year ago, rising 31 percent from the 32,004 job cuts announced in December 2010. For all of 2011, employers announced 606,082 cuts, up 14 percent from the 529,973 layoffs in 2010.

"Job cuts in 2011 were dominated by the government and financial sectors. These two alone accounted for 41 percent of all the job cuts announced last year," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

The 183,064 government job cuts in 2011 represented a record high for that sector since Challenger began tracking it in 2002. And while the financial sector did not come close to its record high, annual cuts for the sector were 63,624, up 165 percent from 2010.

"Unfortunately, these sectors are likely to continue to struggle in 2012. Washington is under immense pressure to cut spending and it looks like every deal to extend tax cuts, raise the debt ceiling and pass the budget will come with measures to cut spending, which can be expected to result in more job cuts," Challenger said.

This report showing a further decline in job cuts comes one day ahead of the U.S. Labor Department's key U.S. jobs report, which is forecast to show a 150,000 increase in non-farm payrolls.

Challenger said planned hirings in December totaled 14,074, down from 63,527 in November but up from 10,575 a year earlier. For all of 2011, announced new jobs totaled 537,572, up from 402,638 in 2010.