US stock markets advanced on Wednesday morning ahead of a monetary policy statement by the Federal Reserve and following better than anticipated news concerning the US jobs report. Led by banks and energy, all 10 sectors in the S&P 500 were up at the open, and the Dow Jones Industrial Average was trading higher by 200 points by mid-morning.
Private-sector employers in the United States added 110,000 jobs in the month of October, versus an expected gain of 101,000 jobs, with planned layoffs at United States firms falling to the lowest level in four months following a two year high.
As companies announce seasonal positions, plans for hiring grew from 76,551 in September to 159,177, with jobs in the retail sector leading the way with 133,940 open positions. This release comes two days before the US government’s key jobs report on Friday that is expected to show that the US economy added 95,000 positions in the last month.
US Jobs Report Shows Slight Improvement
Although the US jobs report was a little better than expected, it is still a sign that there has been only slight improvement in the labor market, and the data points to an unemployment rate that will continue at present levels.
On Tuesday, markets fell on the news that the belabored Greek Prime Minister was to hold a referendum on the Euro zone bailout plan, which served to reignite fears of a disorderly default in the markets. Wednesday, investors will be focused on the media briefing by Ben Bernanke, Chairman of the US Federal Reserve.
Bernanke is to speak on the heals of a two day meeting concerning interest rate policy, and is not expected to announce any monetary stimulus measures, although additional stock market volatility may increase the possibility of later action.
The debate by the United States central bank on the course of policy is set against the backdrop of global turmoil and involves a domestic economy that is far away from a clean bill of health. The debate consists of a potential shift toward the policy triggers of jobless rates and inflation. As the fate of the US recovery is tenuous, failure on the part of Europe to end the debt crisis could derail what little progress has been made.
Small Business Puts Plans For Holiday Hiring On Hold
While the holiday season is traditionally the time when small businesses ramp up staffing, including adding jobs and offering more hours to existing employees, this year may prove to be different. Even in light of a modestly improving US jobs report, concerns as to the depressed sentiment of the average consumer have put a damper on small business’ plans for hiring.
In order for these small businesses to add positions and hours, there has to be the expectation that business will be good. The concern is that as consumer confidence remains low, customers will be reluctant to spend and will hold on to their cash. This type of caution does not bode well for job creation and growth.
Small business plays an integral role in holiday hiring, employing half of workers in the United States and paying 43% of total private payroll in the United States. Over the past 17 years small businesses have also accounted for 65% of new jobs in the US.
Minus the growth and certainty that is needed to inspire small business to add workers and make a real difference in holiday hiring, the prospects for an increase in small business hiring look dismal. A late season spike in hiring is possible if news concerning the state of the economy turns positive and customers begin spending.
There are some positive indicators, including an increase in spending in the third-quarter that was at the highest level all year. With many Americans a full three years into frugality, many are ready to begin spending money again – a favorite American past time.