Instant view: Private sector jobs up more than expected

Reuters

NEW YORK (Reuters) - U.S. private employers added a better-than-forecast 93,000 jobs in November, a report by payrolls processor ADP Employer Services showed on Wednesday.

U.S. non-farm productivity grew faster than previously estimated in the third quarter as employers squeezed more output from workers and kept costs contained, a government report showed on Wednesday.

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KEY POINTS: * Reuters consensus forecast for the ADP payroll change for November was for an increase of 69,000 jobs. * The ADP October payroll change was revised to an increase of 82,000 from 43,000. * The ADP November payroll increase was the highest since November 2007. * Productivity increased at an annual rate of 2.3 percent rather than the 1.9 percent pace reported last month, the Labor Department said, after contracting 1.8 percent in the second quarter. * The upward revision to third-quarter productivity, a measure of hourly output per worker that is viewed as an indicator of the economy's vitality or lack of it, matched economists' expectations.

COMMENTS:

ADP:

JOHN CANALLY, INVESTMENT STRATEGIST, LPL FINANCIAL, BOSTON:

"It is just another sign of reacceleration in the labor market. Some of the details suggest that there is a 60 percent chance that the government's payroll number could beat consensus. So it's better than a coin-flip if you are a trader.

"This is not a bolt out of the blue. There has been anecdotal evidence that there is more hiring this year. This confirms other indicators that the economy is reaccelerating.

"But at the end of day, people may curb their enthusiasm with the stronger data in the United States. We still have Europe and the PMI in China and what it means for economic policy there."

ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

"Another positive surprise like last month, you had better-than-expected growth in November, upward revisions, it overall suggests that the job market has a bit more momentum than we previously had thought."

"Given the fairly loose relationship between the ADP and the official government measure of employment growth we're not going to be changing any of our forecast, but we do think that the number is broadly consistent with another strong gain in payroll employment in November to be reported on Friday, and perhaps a decline in the unemployment rate."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES IN TORONTO:

"As we saw last week with the jobless number, the improvements are continuing on the labor front. That will be taken as good news, even though futures were already higher before this. We'll get some follow-through in Europe, I expect, and I think this adds to the potential of our getting a bounce-back from the past three or four days.

After that, we'll go back to looking to see if other numbers corroborate this. But certainly the employment picture is looking less dire. That said, there hasn't been a one-to-one correlation between ADP and Friday's payroll number, so the market's view on that probably won't be impacted by this."

PRODUCTIVITY:

ROBERT PAVLIK, CHIEF MARKET STRATEGIST AT BANYAN PARTNERS LLC IN NEW YORK:

"Productivity was in line with what was expected, and revised up from the first report. The labor costs may indicate that we're at the bottom of a trend, and there's going to be at least some speculation that we can only get so much more out of these labor costs with productivity rising.

"We're going to focus more on China's data today and the fact that the ADP report came in better than expected. That's a positive precursor for Friday's number. All that working together is good news, and that's what lifting futures rather than productivity."

STOCKS: U.S. stock index futures edged higher after the ADP jobs report. BONDS: U.S. long-dated Treasuries fall to session lows. DOLLAR: U.S. dollar extends gains versus the yen and trims losses versus the euro.

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