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WRAPUP 5-US hiring surges in Dec, buoys economic outlook
January 5, 2011 / 5:43 PM / 7 years ago

WRAPUP 5-US hiring surges in Dec, buoys economic outlook

 * Private U.S. employers added 297,000 jobs in December
 * Economists' estimates eclipsed
 * Analysts raise expectations for Friday payrolls report
 * Non-manufacturing sector activity jumped in December
  (Adds details, economist quote)
 By Jonathan Spicer
 NEW YORK, Jan 5 (Reuters) - The number of U.S.
private-sector jobs surged in December at a rate three times
stronger than forecast, the most bullish signal that a recovery
in the world's biggest economy is shifting up a gear.
 Private employers added 297,000 jobs last month, payrolls
processing company ADP Employer Services said on Wednesday. It
was the largest gain on ADP records dating to 2000.
 The data came two days ahead of the government's more
comprehensive employment report for December, the world's most
closely watched economic indicator, and led many economists to
raise their payrolls forecasts.
 The report sparked a sharp cut in U.S. Treasury debt prices
[US/], and the U.S. dollar gained 1.5 percent against the yen,
on pace for its biggest one-day gain in more than three months
as investors bet on a stronger recovery. Stocks and crude oil
futures reversed losses and headed higher. [.N]
 "Sometimes numbers come as bolts from the blue; this is one
of them," said Ian Shepherdson, chief U.S. economist at High
Frequency Economics.
 "Nothing in any other indicators of the state of the labor
market last month -- jobless claims, help wanted, surveys --
suggested anything like this was remotely likely."
 But some economists cautioned the report may have been
skewed by how ADP tracks employment and adjusts the data for
seasonal fluctuations. Others said simply it is not a reliable
guide to predicting the government's payroll count.
 Still, the data was the latest in a series, ranging from
trade to retail sales, suggesting the U.S. recovery is gaining
 A separate report on Wednesday showed service sector
activity also picking up. The Institute for Supply Management's
index of national services activity rose to 57.1 in December,
the highest level in more than four years, from 55.0 in
November. Economists had expected a reading of 55.6.
 "Yet another number that beats consensus and keeps the
positive sentiment on the economy alive with some momentum
going into the new year," Sean Incremona, an economist at 4Cast
Ltd in New York, said of the service sector data.
 U.S. private sector jobs rise by record in Dec:
 ADP vs. the U.S. Labor Department:
 U.S. planned layoffs fell to lowest since 2000 in Dec:
 U.S. mortgage applications ebb:
 Vistage CEO confidence survey for 4Q 2010.
 Insider video: ISM Jobs Disappoints, Questions Over ADP
 Nonfarm payrolls are now expected to have increased 175,000
in December, according to a revised Reuters poll, up from the
previous pre-ADP 140,000 forecast. The jobless rate is expected
to slip to 9.7 percent from November's 9.8 percent, a
projection untouched by the ADP data. [ID:nN05284674]
 Adding to the improving employment picture, the number of
planned layoffs at U.S. firms fell last month to the lowest
level in 10 years, according to a report by consultants
Challenger, Gray & Christmas Inc. [ID:nNLL4CE7RM]
 And a survey of chief executives of small companies showed
a majority planned to add employees in 2011 for the first time
in three years, according to small business group Vistage.
 The brighter labor market outlook is a boost for President
Barack Obama, whose administration has struggled to create jobs
as the economy started to recover from the huge hit it took in
the financial crisis.
 Obama's failure to significantly lower the unemployment
rate was seen as a key reason his Democratic party lost control
of the U.S. House of Representatives in November's election.
Republicans formally took power in the House on Wednesday.
 A number of analysts said that because employees of ADP
clients remain on payroll records until year-end, regardless of
their employment status, the upbeat reading in the report on
Wednesday could be misleading.
 While ADP adjusts the data for seasonal fluctuations, the
so-called seasonal factors would have anticipated a surge in
the number of workers falling off payroll records in December,
they said.
 "With fewer firings this year than in recent years, the
'purge' may have been less than the seasonal factors expected
which would have caused a 'surge' in the seasonally adjusted
data for December," said Daniel Silver, an economist at
JPMorgan in New York.
 A subindex in the ISM services sector gauge slipped in
December, a finding at odds with the robust ADP reading.
  (Additional reporting by Emily Flitter, Ann Saphir and Lucia
Mutikani; Editing by Padraic Cassidy and Andrew Hay)

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