In what could be an encouraging sign for Friday’s key government employment report, a reading Wednesday from payroll processor ADP (NYSE:ADP) showed private-sector payrolls grew sharply last month.
ADP’s report, in conjunction with Macroeconomic Advisers, showed private-sector jobs jumped by 297,000 in December, easily outpacing the 100,000 gain that was expected.
The report “suggests nonfarm private employment grew very strongly in December, at a pace well above what is usually associated with a declining unemployment rate,” said Joel Prakken, chairman of Macroeconomic Advisers. “After a mid-year pause, employment seems to have accelerated as indicated by September's employment gain of 29,000, October's gain of 79,000, November's gain of 92,000 and December's gain of 297,000.”
On Friday, the Labor Department will unveil its monthly jobs report, and a similarly big gain would bode well not only for job seekers but for the entire economy. Economists are looking for an increase of 135,000, although the robust reading from ADP will have some economists raising their estimates.
While recent data have offered hope that the economy is starting to recover more briskly, without sustainable jobs growth any momentum will prove ephemeral.
"Employment growth has accelerated over the last few months,” said Gary Butler, president and chief executive of ADP. “The recent decisions by our nation's policymakers to extend and enact tax cuts for the short-term are positive, but more can be done. The new Congress has a great opportunity to support ongoing job creation by enacting tax policies and creating business incentives that together will encourage businesses to invest and expand."
Wednesday’s report showed large businesses – those with 500 or more employees – grew by 36,000 employees, while medium-sized businesses added 144,000 workers. Businesses with fewer than 50 employees hired 117,000 new employees.
Service-sector jobs rose by 270,000, while factory jobs inched up by 23,000.
Stock-index futures reacted positively to the report, though they continue to point to losses at the open.