Companies in the U.S. boosted payrolls by more than forecast in October, data from a private report showed today.
Employment increased by 43,000 after a revised 2,000 drop in September, according to figures from ADP Employer Services. The median estimate of 38 economists surveyed by Bloomberg News called for a 20,000 gain. Forecasts ranged from a decline of 10,000 to a 50,000 increase.
A Labor Department report in two days will show companies added 80,000 workers last month and the unemployment rate held at 9.6 percent, according to the survey median. Concern that growth is too slow to lower unemployment will probably prompt Federal Reserve policy makers to take additional steps today to spur the world’s largest economy.
“It does look like momentum is turning more positive,” said Jim O’Sullivan, global chief economist at MF Global Ltd. in New York. “The data are consistent with private payrolls coming in above consensus. Momentum is going to start turning positive gain in the next couple of months.”
Over the previous six reports, ADP’s initial figures were closest to the Labor Department’s first estimate of private payrolls in May, when it overestimated the gain in jobs by 14,000. The estimate was least accurate in April, when it underestimated the employment gain by 199,000.
ADP’s initial September estimate showed a 39,000 drop in private employment compared with the government’s estimate of a 64,000 increase.
The Fed later today will probably introduce an unprecedented second round of unconventional monetary easing by announcing a plan to buy at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News. The measures are meant to bring down unemployment and keep the economy growing.
Stocks and Treasuries rose before the Fed’s decision. The Standard & Poor’s 500 Index gained 0.1 percent to 1,195.18 at 9:34 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to price, fell to 2.55 percent from 2.59 percent late yesterday.
Anxiety over jobs and the economy helped Republicans seize control of the House of Representatives in elections yesterday, delivering a rebuke to the domestic agenda of President Barack Obama.
Today’s ADP report showed a decrease of 34,000 workers in goods-producing industries including manufacturers and construction companies. Service providers added 77,000 workers.
Employment in construction fell by 23,000, while factories cut 12,000 jobs, ADP said.
Companies employing more than 499 workers reduced their workforces by 2,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 24,000 jobs, and small companies increased payrolls by 21,000, ADP said.
“Employment gains of this magnitude are not sufficient to lower the unemployment rate,” Joel Prakken, chairman of Macroeconomic Advisers LLC, which produces the figures with ADP, said in a statement. “Given modest growth in the second and third quarters, and the usual lag of employment behind GDP, it would not be surprising to see several more months of lethargic employment gains, even if the economic recovery gathers momentum.”
Overall payrolls probably rose by 60,000 in October, according to the median forecast of economists surveyed before the Labor Department’s Nov. 5 report. The difference from the projection for private employment reflects government job reductions related to the winding down of decennial census and state and local budget cuts.
The ADP report is based on data from about 340,000 businesses employing more than 21 million workers.
Some companies are still cutting staff while others are hiring.
United Technologies Corp., the maker of Pratt & Whitney jet engines and Carrier air conditioners, plans to cut about 3,300 jobs as part of cost-reduction efforts announced this year.
The Hartford, Connecticut-based company sliced 1,300 positions in the first nine months of this year and is targeting the rest through 2011, it said in a quarterly filing with the U.S. Securities and Exchange Commission last week. At the end of 2009, the company had 206,700 workers.
General Electric Co. plans to spend $432 million and add 500 U.S. jobs to design and make energy-efficient refrigerators. Factories and design centers will open in Indiana, Kentucky, Alabama and Tennessee over the next four years, Fairfield, Connecticut-based GE said.
“When the economy comes back -- and it will come back at some point -- we want to be in position with the right product offering, the right cost structure to leverage the expansion,” Jim Campbell, head of the appliances and lighting division, said in an interview on Oct. 18.
To contact the editor responsible for this story: Christopher Wellisz at email@example.com