Companies in the U.S. added more workers in February than forecast, indicating the labor market may be strengthening, data from a private report based on payrolls showed today.
Employment increased by 217,000 last month after a revised 189,000 gain in January, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 180,000 gain last month.
Bigger, sustained payroll gains would underscore Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress yesterday that there are “grounds for optimism” about the labor market in coming months. Companies added 200,000 jobs in February, while unemployment rose to 9.1 percent, economists project a Labor Department report to show in two days.
“There’s just an unambiguous signal that payroll employment has picked up,” Joel Prakken, chairman of Macroeconomic Advisers LLC, which produces the figures with ADP, said in a conference call with reporters. “Employment looks like it’s increasing in almost every sector of the economy.”
Estimates in the Bloomberg survey of 34 economists ranged from increases of 90,000 to 210,000.
Stock-index futures fell as crude oil prices increased. The March contract on the Standard & Poor’s 500 Index declined 0.1 percent to 1,300.3 at 8:51 a.m. in New York. Oil for April delivery gained $1.52, to $101.15 a barrel in electronic trading on the New York Mercantile Exchange.
Labor Department Figures
Over the previous six reports, ADP’s initial figures were closest to the Labor Department’s first estimate of private payrolls in November, when it overstated the gain in jobs by 43,000. The estimate was least accurate a month later, when it overestimated the employment gain by 184,000.
The Labor Department said payrolls in January rose by 36,000 workers, the fewest in four months and depressed by snowstorms that swept through parts of the nation during the week covered by the government’s employer survey. ADP figures, which measure the number of people on payroll processing rolls regardless of whether they could show up for work, initially showed companies added 187,000 workers during the month.
Today’s ADP report showed an increase of 15,000 workers in goods-producing industries, which includes manufacturers and construction companies. Employment at factories rose by 20,000 jobs.
Service providers added 202,000 workers, ADP said.
Size of Companies
Companies employing more than 499 workers expanded their workforces by 13,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 104,000 jobs and small companies increased payrolls by 100,000, ADP said.
Intel Corp. (INTC) and Home Depot Inc. (HD) were among U.S. companies last month that announced plans to boost payrolls. A report yesterday showed U.S. manufacturing grew in February at the fastest pace in almost seven years, driven by gains in orders, employment and exports that signal factories will continue to propel the expansion.
“Overall, when we look at the job market we do believe that it is on track to improve,” Don Johnson, vice president of U.S. sales for General Motors Co. (GM), said on a teleconference yesterday. “February was quite simply another great month for General Motors.”
GM said vehicle deliveries last month increased 46 percent from February 2010.
Some businesses are concerned about limited hiring, even after gross domestic product increased in 2010 by the most in five years.
“The numbers coming out of the U.S. for GDP and industrial production are pretty solid, but we have an issue with regard to employment,” James Meil, chief economist at Eaton Corp. (ETN) said on a Feb. 25 teleconference. The Cleveland-based maker of pumps used in forklifts raised its full-year forecast amid higher hydraulics sales.
The labor market “has improved only slowly” and it may take “several years” for the unemployment rate to reach a “more normal level, Bernanke said yesterday during testimony before the Senate Banking Committee.
Still, “we do see some grounds for optimism about the job market over the next few quarters, including notable declines in the unemployment rate in December and January, a drop in new claims for unemployment insurance, and an improvement in firms’ hiring plans,” Bernanke said.
Overall payrolls, which include government workers, probably rose by 193,000 in February, according to the median forecast of economists surveyed before the Labor Department’s March 4 report.
President Barack Obama last week told the first meeting of his panel of outside economic advisers that the U.S. must deal with stubbornly high unemployment even as the recovery is well under way.
The ADP report is based on data from about 340,000 businesses employing more than 21 million workers.
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