ADP Automatic Data Processing Inc

By Lisa Beilfuss 

Private-sector payrolls jumped in December, with employers hiring at the fastest clip in a year and the latest indication of solid U.S. job growth.

Private payrolls in the U.S. increased by 257,000 last month, said payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics. The report is based on data collected from ADP clients in addition to lagged government data.

Economists surveyed by The Wall Street Journal expected a more modest increase of 195,000. The November gain was revised down slightly to 211,000 from 217,000.

"Strong job growth shows no signs of abating," said Mark Zandi, chief economist of Moody's Analytics, noting that the only industry shedding jobs is energy. "If this pace of job growth is sustained," he said, "the economy will be back to full employment by midyear."

Once again, the monthly increase in private payrolls was largely due to the service sector, which represents most of the economy's jobs and has been countering a struggling manufacturing sector. Service-providing firms hired 234,000 workers in December, up from an upwardly revised 213,000 in November. Hiring by firms providing professional and business services--at the best pace this year--powered the increase.

Hiring by manufacturing firms was subdued, but producers added positions for the second straight month. Manufacturers have eliminated positions as a strong dollar, weak energy prices and a softer global economy have sapped demand, but in recent months firms in the sector have added modest amounts of workers. Construction companies also increased payrolls, adding 24,000, up sharply from November.

Hiring was broad-based, with small, medium and large businesses all stepping up hiring at the end of the year.

"The labor markets are finishing the year with a bang," said Chris Rupkey, managing director at MUFG Union Bank, though he cautions that an unusually warm December may have led to a payroll number that exaggerates the labor market's strength.

The ADP report comes ahead of the Bureau of Labor Statistics's employment-situation report, due out Friday morning. ADP lags behind the government's initial private payroll estimate by a month. In November, the initially reported ADP figure came in 6,000 ahead of the BLS number; in October, ADP fell 87,000 short of the government number after coming in at 81,000 ahead of it in September.

Economists polled by The Wall Street Journal expect the BLS to report an increase of 210,000 nonfarm payrolls, which would about match the November gain. Economists expect the unemployment rate to fall to 4.9%, which would be the lowest since February 2008.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

January 06, 2016 09:11 ET (14:11 GMT)

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