NEW YORK (Reuters) - U.S. private sector payrolls rose by the most in three years in November, lifting optimism about the job market ahead of Friday’s government employment report, while manufacturing data showed growth was intact.
The labor market has been among the weakest parts of the U.S. economy, and economists see gains in that area as evidence that the recovery is picking up steam. Manufacturing, on the other hand, has led the recovery.
U.S. private employers added a stronger-than-forecast 93,000 jobs in November, the biggest rise since November 2007, after an upwardly revised gain of 82,000 the month before, data by ADP Employer Services, which developed the report with Macroeconomic Advisers LLC, showed Wednesday.
In a separate report, the Institute for Supply Management said its index of national factory activity dipped to 56.6 last month from 56.9 in October, in line with expectations and well above the 50 level which indicates expansion.
The report also showed employment plans were steady with the prior month.
The private payrolls rise “is just another sign of re-acceleration 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,” said John Canally, Investment Strategist at LPL Financial in Boston.
The U.S. government’s monthly employment report on Friday is forecast to show another month of job gains in both the private and public sectors. In a Reuters poll, nonfarm payrolls are seen up 140,000 in November while private payrolls are seen up 153,000.
U.S. stocks ended up more than 2 percent, helped partly by the data but also by speculation that the European Central Bank would take tough measures to address the euro zone debt crisis. The U.S. dollar ended down against the euro, which snapped a three-day decline. Yields on benchmark U.S. Treasury 10-year notes were sharply higher.
UNEMPLOYMENT STILL SEEN HIGH
Even though economists cheered the job gains, they noted the labor market still has a long way to go. Friday’s jobs report is forecast to show the U.S. unemployment rate remained at 9.6 percent in November.
Also, the number of planned layoffs in November by U.S. employers rose to the highest since March, according to a report by consultants Challenger, Gray & Christmas, Inc.
Employers announced 48,711 planned job cuts last month, up 28 percent from 37,986 in October, with the government and nonprofit sector leading the rise, the report showed.
A government report showing construction spending posted a 0.7 percent gain in October provided a more upbeat view of the economy. Expectations had been for a 0.4 percent decline in spending, a Reuters poll showed.
Another report showed that nonfarm productivity grew faster than previously estimated in the third quarter. According to the government data, productivity increased at an annual rate of 2.3 percent rather than the 1.9 percent pace reported last month, as employers squeezed more output from workers and kept costs down.
Suggesting improvement in consumer demand also, U.S. auto sales rose 17 percent in November from a year earlier, according to manufacturers on Wednesday.
The annual sales rate was near 12.3 million vehicles in November, little changed from October, as American consumers were lured into showrooms by month-end discounts for new car purchases that many had delayed through the recession.
Investment bank Goldman Sachs raised its forecast for U.S. GDP growth for 2011 to 2.7 pct from 2.0 pct on Wednesday.
Additional reporting by Lucia Mutikani in Washington, Leah Schnurr, Richard Leong and Steven Johnson in New York and David Bailey in Detroit; Editing by James Dalgleish and Andrew Hay
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