Business hiring is holding up, allaying concerns about a U.S. economic downdraft in the face of a looming fiscal cliff.
Companies added an average 121,000 workers a month in the third quarter, up from 88,000 in the second quarter, according to Labor Department figures released on Oct. 5. Total payrolls, including government, increased an average 146,000 a month, compared with 67,000 in the prior period.
“We’re not seeing a further loss of momentum, and that’s a very important positive,” said Bruce Kasman, chief economist for JPMorgan Chase & Co. in New York.
A pullback in business investment had fanned concerns that companies would begin to pare hiring in anticipation of $600 billion in government spending cuts and tax increases at the start of 2013. The Congressional Budget Office has warned the economy will fall into recession if Congress allows the fiscal squeeze to go ahead.
The jobs numbers suggest the economy is expanding at a “trend-like pace” of around 2 percent, Kasman said. That would be in line with the 2.2 percent average quarterly growth rate of gross domestic product since the 18-month recession ended in June 2009.
Job gains have averaged 146,000 a month so far this year, compared with the 153,000 average last year.
In an effort to speed up the recovery, the Federal Reserve last month announced a third round of asset purchases and extended its horizon for near-zero interest rates at least through the middle of 2015.
Arne Sorenson, president and chief executive officer of Marriott International Inc., described the outlook for business in the U.S. and Canada as “steady as she goes” in an Oct. 4 conference call with analysts.
“We’re now sort of thinking 2-percent-ish GDP growth for next year,” said Sorenson, whose Bethesda, Maryland-based company is the largest publicly traded U.S. hotel chain.
Confidence is growing at automakers, including General Motors Co., as cars and light trucks sell at the fastest pace in four years.
“We continue to be encouraged by positive signs from the housing sector, lower jobless claims, higher consumer sentiment and higher consumer spending,” Kurt McNeil, GM’s vice president of U.S. sales, said on a conference call on Oct. 2.
Toll Brothers Inc., the largest U.S. luxury-home builder, reported a better-than-estimated profit and an increase in revenue for its third quarter ended July 31.