Bank of America and the U.S. Army Make Jobless Numbers Worse
Lesson learned: If you're the nation's largest bank or the main branch of the U.S. Armed Forces, your hiring decisions can have quite an impact on the economy. Case in point, the number of announced firings jumped 212 percent last month largely because of reductions made by Bank of America and the U.S. Army, reports Bloomberg. This morning, the Dow Jones and S&P opened slightly lower at the opening bell. But it wasn't all bad news today: a separate report shows the economy added 91,000 jobs last month. Here's a breakdown of the two reports.
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First the bad news: In September, U.S. employers announced the biggest rise in job cuts in more than two years, reports Reuters. Announced firings jumped to more than 115,000 last month, up from more than 37,000 in September 2010. The data comes from Chicago-based Challenger, Gray & Christmas, which says Bank of America's planned 30,000 employee layoffs and the Army's five-year troop reduction withdrawal account for about 70 percent of the firings. But in one way, the concentrated layoffs aren't a bad thing says the company's chief executive John Challenger. "Neither of these cuts is directly related to recent softness in the economy." However, he did add that the layoffs “could definitely be a sign of more cuts to come.”
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On the bright side: While some companies are announcing layoffs, others are expanding at a faster-than-expected pace, reports Bloomberg. "Companies in the U.S. added 91,000 jobs in September, according to data from ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for an advance of 75,000." Giving a scorecard for the ADP's forecasting record, reporter Bob Willis notes that "Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in March, when it understated the gain in jobs by 29,000. The estimate was least accurate in June, when it overestimated the increase in employment by 100,000." For what it's worth, the ADP also had a rather lousy prediction last month, showing a 91,000 gain in August company payrolls while the Labor Department data had a gain of only 17,000.
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Lastly, the other big factor on Wall Street is obviously on the European debt crisis, CNN Money reports. "Until Europe isn't part of the news, until there is some resolution to what is going on in Europe, it is going to be somewhere on the stage," says Mark Luschini, chief investment strategist at Janney Montgomery Scott.
