Companies added more workers than forecast in December, a sign that the U.S. labor market was gaining momentum heading into 2012, according to a private report based on payrolls.
The 325,000 increase was the highest in records going back to 2001 and exceeded the highest projection in a Bloomberg News survey after a revised 204,000 gain the prior month, the report from the Roseland, New Jersey-based ADP Employer Services showed today. The median estimate called for an advance of 178,000.
An acceleration in hiring may spur further gains in consumer spending, which accounts for about 70 percent of the world’s largest economy. A Labor Department report tomorrow may show payrolls rose by 150,000, not enough to keep the unemployment rate (USURTOT) from rising to 8.7 percent, economists in a Bloomberg survey projected.
“We certainly are seeing resilience in the job market,” said Sean Incremona, a senior economist at 4cast Inc. in New York. “We’ve seen some improvement versus earlier in 2011 and it’s encouraging.”
The projections for December ranged from 125,000 to 230,000, based on the estimates of 38 economists surveyed by Bloomberg.
A report today from the Labor Department showed first-time claims for jobless benefits (INJCJC) declined 15,000 last week to 372,000. The average over the past four weeks fell to the lowest level in more than three years.
Stock Futures
Stock-index futures pared losses after the reports. The contract on the Standard & Poor’s 500 Index expiring in March fell 0.5 percent to 1,267.3 at 9:14 a.m. in New York.
The December ADP number may have reflected the so-called purge effect. Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses update, or purge, their figures with ADP.
“It is a difficult time of year to seasonally adjust the ADP data,” Joel Prakken, senior managing director at Macroeconomic Advisers LLC in St. Louis, which produces the data with ADP, said on a conference call. “In an improving labor market, it can lead to an upward bias to seasonal job gains.”
Prakken said it wasn’t clear “to what extent this factor is at play in any particular December.”
The paycheck processor estimates this change when adjusting its data for seasonal variations and, because there were fewer firings at the end of 2011 than in previous years, ADP may find it more difficult to formulate a projection, according to economists like Peter D’Antonio.
‘Huge Assumptions’
“This huge purge of workers is beyond the scope of normal seasonal adjustment,” D’Antonio, an economist at Citigroup Global Markets Inc. in New York, said in a research note before the report. “So the ADP folks have to make huge assumptions for December that often widely miss the mark.”
ADP’s initial figures for November showed a 206,000 gain, while the Labor Department’s data two days later registered an increase of 140,000 in private payrolls for the month.
