Companies in the U.S. boosted payrolls more than forecast in November, propelled by increased hiring at small businesses, data from a private report showed today.
Employment increased by 93,000, the most since November 2007, after a revised 82,000 rise in October that was almost double the initial estimate, according to figures from ADP Employer Services. The median projection of 40 economists surveyed by Bloomberg News called for a 70,000 gain last month. Small firms added more workers than at any time since the recession began in December 2007.
A pickup in job growth would help generate more incomes and spur consumer spending, which accounts for about 70 percent of the economy. A Labor Department report in two days will show companies added 155,000 workers last month and the unemployment rate held at 9.6 percent, according to the survey median.
“The report says the economy is expanding,” said Hugh Johnson, chief investment officer at Hugh Johnson Advisors LLC in Albany, New York, who projected a gain of 100,000. “You have to really anticipate that it’s going to be small businesses that will be the primary source of hiring.”
Stock-index futures maintained gains and Treasuries fell after the report. Futures on the Standard & Poor’s 500 Index expiring this month rose 1.4 percent to 1,196.20 at 9:02 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to price, rose to 2.91 percent from 2.80 percent late yesterday.
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 overstated the gain in jobs by 14,000. The estimate was least accurate in October, when it underestimated the employment gain by 116,000.
ADP’s initial October estimate showed a 43,000 gain in private employment compared with the government’s estimate of a 159,000 increase. Projections for November ranged from gains of 40,000 to 125,000.
Today’s ADP report showed an increase of 14,000 workers in goods-producing industries, including manufacturers and construction companies. Service providers added 79,000 workers, the 10th straight gain.
Employment in construction fell by 3,000, the smallest drop since June 2007, while factories added 16,000 jobs, ADP said.
Companies employing more than 499 workers expanded their workforces by 2,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 37,000 jobs and small companies increased payrolls by 54,000, ADP said.
“There’s just a feeling that maybe we’ve turned a corner” in the labor market, Joel Prakken, chairman of Macroeconomic Advisers LLC, which produces the figures with ADP, said in a conference call with reporters. “It looks to me as if hiring is beginning to pick up. I do expect these employment numbers to get firmer” in 2011, he said.
While companies are adding workers, another report today showed government payrolls are shrinking. Employers in the U.S. announced plans in November to cut 48,711 jobs, the most in eight months, according to Challenger, Gray & Christmas Inc. Government and non-profit agencies led the announced reductions with 10,761.
Overall payrolls probably rose by 145,000 in November, according to the median forecast of economists surveyed before the Labor Department’s Dec. 3 report. The difference from the projection for private employment reflects the inclusion of jobs in the overall nonfarm payrolls figure.
Federal Reserve policy makers last month began buying Treasury securities as part of a plan to pump as much as $600 billion more into the financial system in a bid to keep interest rates low, accelerate growth and aid in job creation.
Fed Chairman Ben S. Bernanke has been among those saying the recovery has been too slow, keeping unemployment too high and leading to a deceleration in inflation that raises the risk of deflation, or sustained and damaging price decreases.
Some companies are boosting payrolls. Citigroup Inc., which claims 2,500 of the world’s 3,000 largest corporations as clients, said last month that it plans to hire about 200 bankers by the end of 2011 to court businesses with less than $20 million of annual sales.
The ADP report is based on data from about 340,000 businesses employing more than 21 million workers.
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