WASHINGTON: US private-sector employers shrugged off a looming budget crisis and stepped up hiring in December, offering further evidence of underlying strength in the economy as 2012 ended.
While other data yesterdayshowed an increase in the number of Americans filing new claims for unemployment benefits, the trend remained consistent with steady job growth.
“The underlying economy has momentum, and the employment data confirms that. The hope and prayer of the market is that our political leaders don’t screw it up,” said John Brady, managing director at R J O’Brien & Associates in Chicago.
Although Congress approved a deal to avoid the so-called fiscal cliff — a combination of sharp government spending cuts and higher taxes that would have sucked about $600bn from the economy — the budget problems are far from resolved. The ADP National Employment Report showed the private sector added 215,000 jobs last month after increasing their payrolls by 148,000 in November. The report is jointly developed with Moody’s Analytics.
The job gains came even as companies worried the economy might fall off the fiscal cliff. However, the ADP data tends to overstate job gains in December because of a year-end accounting quirk.
“While we are encouraged by the better tone in the ADP employment report, we are cautious about reading too much into it, particularly given its tendency to exaggerate the performance of the labour market in December,” said Millan Mulraine, a senior economist at TD Securities in New York.
Still, the report added to other data ranging from consumer spending to manufacturing that have suggested the economy was in a much better shape that previously thought. It was released ahead of the government’s more comprehensive employment report today. That report is expected to show employers added 150,000 jobs to their payrolls in December, according to a Reuters survey of economists, up from 146,000 in November.
A separate report from the Labour Department showed initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 372,000 last week. However, claims data for nine states, including California and Virginia, was estimated because of the Christmas and New Year holidays.
The four-week moving average for new claims, a better measure of job market trends, was little changed at 360,000, a sign labour conditions continue to improve at a steady pace. Reuters
