ADP: Companies added 238,000 jobs in December

WASHINGTON – Companies added more workers than projected in December as U.S. employers grew more optimistic about the prospects for demand, a private report based on payrolls showed today.

The 238,000 increase in employment was the biggest since November 2012 and followed a revised 229,000 gain in November that was stronger than initially estimated, according to the ADP Research Institute in Roseland, N.J. The median forecast of economists surveyed by Bloomberg called for a 200,000 advance.

A pickup in hiring coupled with wage gains are helping to spur faster growth in the consumer purchases that make up almost 70 percent of the economy. A Labor Department report this week may show private payrolls rose by 197,000 last month, according to the Bloomberg survey median.

“The job market ended 2013 on a high note,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Penn., said in a statement. Moody’s produces the figures with ADP. “Job gains are broad-based across industries, most notably in construction and manufacturing. It appears that businesses are growing more confident and increasing their hiring.”

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Estimates in the Bloomberg survey of 36 economists ranged from gains of 170,000 to 225,000 after a previously reported increase of 215,000 in November.

The December tally brought the 2013 average to 179,600 compared with 163,000 per month in the previous year, according to ADP data.

Construction jobs

Construction increased headcount by 48,000 in December, the biggest gain since February 2006. Employment in trade, transportation and utilities increased 47,000, while factories added 19,000 jobs, today’s report showed. Professional and business services employment rose by 53,000 last month.

Payrolls at service providers climbed by 170,000 jobs in December.

Companies employing 500 or more workers added 71,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 59,000 workers and small companies expanded payrolls by 108,000.

The Labor Department will release its December employment report on Jan. 10. The economy probably added about 195,000 jobs after 203,000 a month earlier, according to the median projection in a Bloomberg survey.

“Consumer spending has accelerated and sentiment has improved, which is likely indicative of better labor market conditions,” Bank of America Corp. economists led by Ethan Harris wrote in a research note last week. “We look for notable gains in manufacturing, retail and construction jobs.”

Manufacturing growth

A pickup at factories is helping to support the expansion, now in its fifth year. Manufacturing grew in December at the second-fastest pace in more than two years, according to the Institute for Supply Management. The purchasing managers group’s factory index eased to 57 from the prior month’s 57.3, which was the highest since April 2011, the Tempe, Ariz.-based group said last week.

Orders reported by purchasing managers were the strongest since April 2010 and an employment gauge reached its highest level since June 2011 in the ISM data.

Among companies pointing to a brighter economic outlook is Dearborn, Mich.-based Ford Motor Co., even as the automaker’s December sales trailed analysts’ estimates.

“We’ve had pretty good growth in manufacturing, ongoing, well sustained,” Ellen Hughes-Cromwick, Ford’s chief economist, said on a Jan. 3 conference call. “Housing sector gains likely to improve again this year. Job and income gains have been relatively stable. Inflation has been well contained and long- term interest rates are likely to be edging up, but remain low by historical standards.”

Housing market

Sustained momentum in the housing market recovery is supporting payrolls in the construction industry.

Purchases of new homes exceeded projections in November, holding near a five-year high. Sales declined 2.1 percent to a 464,000 annualized pace from a revised 474,000 rate in October that was the strongest since July 2008, according to Dec. 24 figures from the Commerce Department.

“The housing market remains on track for a solid recovery and is likely to continue to improve over an extended period of time,” Stuart Miller, CEO of Miami-based homebuilder Lennar Corp., said on a Dec. 18 earnings call. “The short supply of available homes and pent-up demand, along with a generally improving economy, will continue to drive the housing recovery forward.”

ADP in October 2012 changed the method it uses to calculate its employment figures dating back to 2001. The report is now derived from a larger sample, and is released jointly with Moody’s Analytics.

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