NEW YORK (CNN/Money) -
The world may find out Friday if the surprisingly strong October job report was a trick -- a return to the job growth blips from early this year -- or the treat of a long-term improvement in the labor market.
The November employment report is due at 8:30 a.m. ET, and economists surveyed by Briefing.com are forecasting a 200,000 gain in jobs in the report's most closely watched number.
That would be less than the 337,000 job gain posted in October, but far more than the average of about 130,000 jobs added each of the previous four months, when reported numbers often missed forecasts by large margins. A gain of 150,000 jobs is needed to keep pace with population growth.
The unemployment rate is forecast to slip to 5.4 percent from 5.5 percent in October, when it edged up slightly due to an increase in the number of people counted as being in the labor force.
Stormy numbers
Part of the large jump in hiring in October was attributed to disruptions in September from the series of major hurricanes that hit the Southeast. Citigroup senior economist Steven Wieting, who has among the most bullish forecasts by predicting a 275,000 job gain in November, said part of his estimate is due to the belief that hurricane impact didn't end in October.
"If you look at October, there were still an abnormally high number of people who couldn't work because of weather," he said. But he also sees some real strength in the employment market going forward, with monthly jobs gain of about 200,000 or better.
"In the face of lots of adversity, growth is pretty good," he said. "All of the labor market indicators we have looked at look pretty decent."
Anthony Chan, senior economist with J.P. Morgan Fleming Asset Management, said that beyond people returning to work following the hurricane, the storms should lift November numbers because of the number of contractors working on repairs in the affected region.
He said there was also an unusually high number of workers who had strikes end in November -- about 11,000, including hotel workers in Atlantic City, N.J.
Chan is forecasting a more conservative 225,000 job gain in November, a bit above his expectation of about 200,000 to 210,000 new jobs a month through 2005.
"I think last month's report was a sign of a hurricane bounce," he said. "November should be a more normal month. But the underlying trend is fairly attractive."
Cautious employers
But even some economists who agree with Wieting and Chan about future jobs growth warn that Friday's November jobs report could again disappoint those hoping for a strong payroll number.
"The problem with the November employment numbers is hiring for the holiday season. It's hard to get a gauge of what it's going to be," said Wachovia Securities senior economist Mark Vitner. "They do a seasonal adjustment to the number to account for that, but the seasonal adjustment causes wider swings. And this year Thanksgiving came later in the month, so hiring might have started after the November data was collected."
Vitner sees signs of strength in the economy, but he added that employers have been reluctant to add as many jobs as expected due to a number of factors, including energy prices. He doesn't think that the recent drop in oil prices will change many minds in the near term.
"There still seems to be an overabundance of caution. Folks don't want to take on too much risk," he said. "Nobody has any certainty about where oil prices go next. If oil gets back to under $40 a barrel and holds there for three or four months, then they'll start to factor it in to hiring decisions."
Still, Vitner sees hiring of about 220,000 a month throughout 2005 and the unemployment rate creeping down to at least 5.3 percent by the end of next year.
There are other economists who said that the disappointing hiring numbers that were recorded for most of this year are likely to be the norm going forward into 2005.
Peter Morici, professor at the University of Maryland, said the level of those filing for initial jobless benefits each week, coupled with oil prices still well above year-earlier levels, a growing trade deficit and the Federal Reserve's policy of raising interest rates will keep employment gains near the key 150,000 a month level.
"The reality is across sectors and across regions the picture is very mixed. The auto sector is not only troubled, but becoming more troubled," said Morici, who is forecasting only a 132,000 job gain in the November report.
Still neither Morici nor other economists believe that even a much weaker-than-forecast employment report would be enough to stop the Federal Open Market Committee from raising rates by a quarter percentage point at its next meeting Dec. 14.
"A bad jobs report is not enough for Greenspan to justify violating expectations," said Morici.
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