US private hiring soars

The US jobs recovery gathered pace as a measure of private-sector hiring surged in December and claims for unemployment benefits fell, suggesting the battered labour market may continue to strengthen in 2012. The ADP National Employment Report's December job tally of 325,000 surprised economists who had expected a gain of roughly half that size. It was also above the 204,000 private jobs added in November.
Many economists struck a note of caution, though, saying the number may have been distorted by seasonal factors. Joel Prakken, of Macroeconomic Advisers, which helps produce the survey, told reporters job readings tend to be inflated at year-end as employers keep workers on payrolls for accounting reasons, and the reading could be revised lower.
"Certainly we're getting some more encouraging news on the jobs market, but we have to be very aware that it does reflect a very volatile period of the year - the holiday season and the days following the new year," said Bernard Baumohl, chief global economist at Economic Outlook Group in Princeton, New Jersey.
In December 2010, a surge in private sector hiring far exceeded the total monthly job gain reported by the government. The more comprehensive government payrolls monthly report, due Friday, is expected to show the economy added 150,000 public and private sector jobs in December, according to a Reuters survey conducted earlier this week.
Even so, data on Thursday confirmed some encouraging trends. The Labour Department reported the number of Americans filing first-time claims for unemployment benefits fell by 15,000 last week, the fourth decline in the last five weeks.
The four-week moving average, considered a better measure of trends, fell to its lowest level since June 2008. The employment component of the Institute for Supply Management's services index rose to 49.4 from 48.9 in November, though "that wasn't as strong as the ADP report....so there are a few mixed messages on employment," said Julia Coronado, chief economist for North America at BNP Paribas in New York.
A private industry survey showed the number of planned layoffs at US firms fell to a five-month low in November. But John Challenger, chief executive officer of consultants Challenger, Gray & Christmas, said the two sectors that suffered the most job cuts in 2011 - government and financial services - look destined to struggle again this year.
The unemployment rate is expected to have edged up to 8.7 percent last month, from 8.6 percent in November, as some Americans who had given up their search for work were lured back into the market, according to a Reuters survey. While recent data suggests the US economy expanded more swiftly in the final three months of 2011 after growing at a 1.8 percent pace between July and September, few economists expect that pace to persist through 2012. Most have penciled in a gradual growth rate of around 2 percent for the year. The Federal Reserve, which will hold its first policy meeting of 2012 later this month, has pledged to hold interest rates at zero until at least mid-2013.