Month’s survey: Jobs up 208,000
Firm’s tally only for private sector
WASHINGTON — U.S. businesses hired at a solid pace last month, according to a private survey, a signal that Friday’s November jobs report from the government will likely also show strength.
Payroll processor ADP said Wednesday that companies added 208,000 jobs in November, the third-straight month that hiring has topped 200,000. The figures suggest that businesses remain confident enough in the economy and their customer demand to add workers despite sluggish growth overseas.
“The labor market is looking pretty good,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics Inc. in White Plains, N.Y. “The labor market’s in pretty good health.”
The report “adds to the evidence that employment growth remains solid,” said Jim O’Sullivan, an economist at High Frequency Economics, a forecasting firm.
The ADP numbers cover only private businesses and sometimes diverge from the government’s more comprehensive jobs report, which includes government agencies.
Economists have forecast that the government’s figures will show that employers added 225,000 jobs in November, according to a survey by financial data provider FactSet. The unemployment rate is expected to decline to 5.7 percent from 5.8 percent.
The job gains in the ADP survey were broadly distributed: Construction companies added 17,000, though that was down from 27,000 in October. Manufacturers added 11,000, slightly below the previous month’s total. A category that includes retail,
transportation and utility companies gained a robust 49,000 jobs, possibly reflecting hiring ahead of the Christmas shopping season.
Smaller companies with fewer than 50 employees accounted for nearly half the job gains for the second-straight month.
Ahu Yildirmaz, vice president of the ADP Research Institute, said banks are lending more freely to small businesses, enabling them to hire more.
“The broadening of hiring to small companies is another sign of an economy returning to health,” Yildirmaz said.
Other recent data suggest Friday’s report should show a solid gain. A survey of manufacturing companies by the Institute for Supply Management, a trade group, found that factories hired workers at a solid pace last month.
Strong economic growth has encouraged more companies to step up hiring. The economy expanded at an annual pace of 4.3 percent from April through September, the healthiest six-month rate in 11 years.
So far this year, employers have added an average 229,000 jobs a month, up from an average of 194,000 in 2013. This year’s monthly average is on track to be the highest in 15 years.
But that trend has yet to translate into significant wage gains. Average hourly wages have risen 2 percent in the past year — barely above inflation and below the 3.5 percent annual increases typical of an economy at full health.
The sluggish pay increases have likely held back consumer spending, which rose only modestly in October. The Christmas shopping season is also off to a slow start, raising concerns that economic growth could weaken in the final three months of this year. Many economists forecast that growth will slide to a 2.5 percent annual rate in the current October-December quarter.
U.S. service firms expanded at a faster pace in November, a signal that overall economic growth should remain robust.
The Institute for Supply Management said Wednesday that its services index rose to 59.3 last month, up from 57.1 in October. The first gain in two months pulls the index close to the eight-year high of 59.6 reached in August. Any reading over 50 indicates expansion.
The index has consistently been pointing to stronger economic growth and hiring this year.
Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said the November reading is “more evidence that the recovery has moved into a higher gear in recent months.”
The Institute for Supply Management is a trade group of purchasing managers. Its survey of service firms covers businesses that employ 90 percent of the American workforce, including retail, construction, health care and financial services firms.
“The services economy is gearing up for the holiday shopping season,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. “Consumers are looking good, and the drop in gasoline is saving them millions and millions of dollars, right at an important time.”
U.S. workers’ productivity increased in the July-September quarter at a slightly faster pace than previously estimated while labor costs declined for a second-straight quarter.
Productivity, the amount of output per hour of work, increased at an annual rate of 2.3 percent in the third quarter while labor costs fell at a rate of 1 percent, the Labor Department reported Wednesday.
In its first estimate, the government had put productivity growth at a slightly slower 2 percent and said labor costs had risen a tiny 0.2 percent. The strengthening of productivity growth combined with a faster drop in labor costs should reassure the Federal Reserve that there is little threat of unwanted inflation pressures harming economic growth anytime soon.
Greater productivity is the key factor determining rising living standards. It enables companies to pay their workers more without having to increase prices.