NEW YORK (CNNMoney.com) -
The economy has been humming along at a surprisingly strong clip but that's still tough to see in the nation's job market.
Part of the problem is the ongoing impact of Hurricane Katrina, which caused payrolls to shrink for the first time in more than two years in September, and was a drag on job growth in October.
But even if Katrina's impact is diminishing, there are other clouds hanging over the labor market. Many economists say the nation's real estate market will slow next year, which would probably put a big crimp in hiring, and they note that rising imports will also slow job growth at home.
In addition, some major employers such as General Motors (Research) and Merck (Research) have announced steep job cuts in recent weeks, while other employers are reporting a shortage of skilled workers that's forcing them to delay hiring plans.
Still, for the November jobs report due Friday morning, economists are looking for hiring to essentially be back on track.
Economists expect that employers added 210,000 jobs to payrolls last month, with the unemployment rate staying at five percent, according to a survey by Briefing.com. That would a bit better than the average 195,000 job gain seen in the first eight months of the year, before Hurricane Katrina slammed into the Gulf Coast on Aug. 29.
But there's more debate than usual among economists about where the payroll number will come in. Estimates range from 110,000 -- which would be below the 150,000 or so needed to keep up with population growth -- to 350,000 according to a Reuters survey.
Some economists, in fact, said that the labor market still hasn't seen a true recovery.
"Anecdotes, including purchasing manager surveys and regional and national Fed indices, do little to support the consensus view of a 210,000 gain," said Jeoff Hall, chief U.S. economist for Thomson Financial, who recently cut his forecast to a gain of 135,000 jobs from his earlier estimate of a 195,000. "Moreover, the market has a tendency to overestimate November payrolls."
Others economists suggest that the traditional numbers are underestimating what they see as growing strength in the labor market.
"Something boosted consumer confidence and I would suggest it's an improvement in the labor market," said Drew Matus, economist with Lehman Brothers. Consumer confidence surged in November thanks to falling gas prices and an improving job outlook, the Conference Board reported Tuesday.
But even some economists with relatively strong employment forecasts say the job market could get hit by a slowdown in home building and real estate in the coming year. Mark Zandi, chief economist of Economy.com, who is looking for a 225,000 gain in November, is one of those pointing to that when he sees tougher times ahead.
"I don't think employment effects will be immediate. It won't be until this time next year we see the effects," said Zandi. "But by then, the underlying employment growth will have gone from the 200,000 we see now down to about 150,000."
Zandi said that real estate, home building, mortgage finance and other home-related industries together accounted for 9.7 percent of total domestic employment in the second quarter of 2005, up from 9.0 percent in the fourth quarter of 2001.
But home builders have been cutting prices and scaling back their applications to build, suggesting that they see a downturn coming in the home market.
Confidence among builders tumbled in November, the National Association of Home Builders reported last month, citing rising mortgage rates, among other factors.
And economists at the National Association of Realtors say rising mortgage rates mean existing home sales have topped out and will cool off next year. Both the realtors and the Office of Federal Housing Enterprise Oversight expect an end to the rapid gains seen in home prices in recent years.
The higher rates and the inability to convert home values into ready cash through home equity loans are expected to cramp consumer spending in the new year. Higher energy costs this winter could hurt, too.
So the employment picture will be substantially weakened sometime next year due to the cooling off in housing, some economists said.
"You're going to see very soft numbers for employment and significant ripple effects from housing," said Asha Bangalore, economist with Northern Trust Co., who is predicting only 120,000 to 140,000 new jobs a month in 2006. She said that housing- and real estate-related jobs accounted for 36 percent of private sector job growth over the last four years.
Zandi said that rising imports will also continue to weigh on U.S. employment, although maybe not as severely as in the past.
"It's not that they (U.S. manufacturers) will be adding jobs, just that they'll be losing less jobs," said Zandi.
But there could still be some spikes in employment in the short-term, especially as clean-up and rebuilding efforts get underway along the Gulf Coast.
Online job search firm Monster Worldwide said Thursday that there was strong growth in job postings last month in the West South Central region, which includes New Orleans and Texas.
Areas such as sales, construction, and a category that includes installation, repair and maintenance saw the biggest gains, according to Steve Pogorzelski, group president at Monster Worldwide.
"Generally we'll see it take 30 to 60 days for those kinds of postings to show up on payrolls," he said.