Companies boosted payrolls in November by the most in a year, a sign that U.S. employers were optimistic about demand after the end of a government shutdown a month earlier, a private report based on payrolls showed today.
The 215,000 increase in employment exceeded the most optimistic forecast in a Bloomberg survey and followed a revised 184,000 gain in October that was larger than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The median forecast of economists called for a 170,000 advance.
Stronger job growth helps provide working Americans with the income gains needed to boost consumer spending at the same time retailers seek to spur holiday sales with discounted merchandise. Federal Reserve policy makers are watching labor-market progress as they debate when to scale back record monetary stimulus.
“Not only is the job market healthy, but it’s improving going into year-end,” said Brian Jones, senior U.S. economist at Societe Generale in New York, whose forecast for a 210,000 gain was the highest in the Bloomberg survey. “We’re optimistic on growth next year, continued improvement, further reductions in the jobless rate.”
Estimates in the Bloomberg survey of 40 economists ranged from gains of 125,000 to 210,000 after a previously reported increase of 130,000 in October.
Stocks fell for a fourth day as investors weighed whether a pickup in employment will prompt the Fed to begin trimming asset purchases. The Standard & Poor’s 500 Index declined 0.4 percent to 1,788.94 at 9:42 a.m. in New York.
Manufacturers, builders and other goods-producing industries increased headcount by 40,000, the most this year. Employment in construction climbed by 18,000. Factories also added 18,000 jobs, the biggest gain since February 2012. Trade, transportation and utility companies created 45,000 jobs last month.
“Employers across all industries and company sizes looked through the political battle in Washington,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in a statement. Moody’s produces the figures with ADP. “If anything, job growth appears to be picking up.”
Payrolls at service providers rose by 176,000 jobs in November, the most in a year.
Companies employing 500 or more workers added 65,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 48,000 workers and small companies expanded payrolls by 102,000.
The Labor Department will release its November employment report on Dec. 6. The economy probably added about 180,000 jobs after 204,000 a month earlier, according to the median projection in a Bloomberg survey.
Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls, which don’t include government agencies, in June. That month, the ADP estimate undershot the agency’s private payrolls number by 14,000. The ADP report was least accurate in October, when it understated the government’s private payrolls figure by 82,000 jobs.
“What we’ve seen with ADP is that it has been consistently revised to match non-farm payrolls,” said Bricklin Dwyer, an a economist at BNP Paribas in New York. “The preliminary estimate of ADP has been fairly unreliable as a predictor of employment growth and the economy.”
Manufacturing has been a source of strength for the economy. Factory activity unexpectedly accelerated in November as export orders and employment climbed, an Institute for Supply Management report showed this week.
A pickup in the housing market, meanwhile, has spurred hiring in construction, according to companies such as Toll Brothers Inc., the largest U.S. luxury-home builder.
“The trades are bringing workers back rapidly as our backlogs grow, and as they see the ability to make money, the kids that left the industry and have been tending bar or delivering pizza, they are now coming back,” Douglas Yearley Jr., chief executive of the Horsham, Pennsylvania-based builder, said in a Nov. 14 presentation.
American Airlines Inc. is also bringing employees on board. AMR Corp., its parent company, is in the process of merging with U.S. Airways Group Inc. to create the world’s biggest airline, having struck an accord with the Justice Department last month.
“We’re hiring over 1,000 new reps and agents this year and we’re on the verge of beginning to hire new pilots for the first time in the decade,” Thomas Horton, chief executive officer of American Airlines and AMR Corp., said in a Nov. 13 merger and acquisition teleconference.
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.