Private Sector Job Creation Highest Ever For ADP Report
The private sector created an eye-popping 297,000 jobs from November to December, according a report from ADP that was the highest number the payroll firm has ever reported.
In its monthly report compiled with Macroeconomic Advisors, ADP said the service sector accounted for the bulk of the creation, with 270,000 jobs while goods producers supplied the remaining 27,000.
Manufacturing saw a gain of 23,000 jobs while construction was unchanged. Large businesses saw the fewest gains, with 36,000 jobs, while medium-sized businesses, with between 50 and 499 workers, created 144,000 positions.
The number was far higher than the 100,000 economists expected the ADP report to show and sets the stage for what could be a positive surprise Friday when the government releases its monthly nonfarm jobs report. That report is expected to show 140,000 jobs were created.
Economists sometimes will use the ADP report to fine-tune their numbers, though the report has varied in its ability to predict the true national jobless picture.
"In the underlying ADP data there is a very clear pattern of acceleration now," Joel Prakken, chairman of Macroeconomic Advisors, told CNBC shortly after the report was released. "I would not discount today's number as a total fluke. I think there is a strong signal in here."
Stock index futures halved their earlier lossesfollowing the data, but were still indicating a lower open for Wall Street. The bond market showed the greatest reaction, turning price gains for Treasurys into losses as the benchmark 10-year note lost 15/32 in price to yield 3.39 percent. The forex market also reacted, with the dollar building on earlier strengthand putting additional pressure on commodities.
The optimistic report came shortly after news that planned layoffs in the US declined in December to the lowest monthly level of 2010, while expected job cuts for the full year came in at the lowest mark since 1997, outplacement firm Challenger, Gray and Christmas reported Wednesday.
Companies reported 32,004 planned layoffs last month, down 34 percent from November and 29 percent from December 2009.
That was the lowest number of planned cuts since June 2000.
For 2010, companies announced 529,973 job cuts, down 59 percent from announced layoffs in 2009.
“The downsizing phase of the recession really came to an end in 2009," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a press release. "Job cutting fell dramatically in the second half of that year. The pace of downsizing continued to slow in 2010 to levels we have not seen since before the 2001 recession."
The government and non-profit sector saw the largest cuts, with 142,255 jobs eliminated.
"Unfortunately, the government sector is likely to see heavy job cuts again in 2011 as the budget shortfalls that existed in 2010 continue into the new year," John Challenger said.
"In fact, the sector could see an increase in job cuts in 2011 as state and local agencies, which saw the heaviest downsizing last year, are joined by federal agencies under increasing pressure from a Congress determined to cut spending."
The auto industry saw layoffs decline 91 percent last year, while retailers cut 61 percent fewer jobs than in 2009.