U.S. Companies Hired 189,000 in November

U.S. Companies Hired 189,000 in November

Dec. 5 (Bloomberg) -- Companies in the U.S. added 189,000 jobs in November, more than triple the amount economists had forecast, a private report based on payroll data showed today.

The increase followed a revised estimate of 119,000 new jobs in October, more than previously calculated, ADP Employer Services said. The ADP has shown average monthly job growth of 93,000 so far this year.

The figures may spur economists to lift their estimates for the government's payroll report in two days. Federal Reserve officials including Chairman Ben S. Bernanke have flagged the importance of the Labor Department's release for their Dec. 11 meeting to set interest rates, and the ADP data diminished traders' expectations of a half-point reduction.

``There has been little to indicate that the labor market has deteriorated noticeably in November,'' Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut, said before the report. A steady job market would be ``a signal that the economy is muddling through, rather than tumbling into recession.''

The ADP report was forecast to show an increase of 50,000, according to the median estimate of 22 economists surveyed by Bloomberg News. Estimates ranged from 10,000 to 100,000.

Treasuries Drop

Treasury securities fell. The yield on the benchmark 10-year Treasury note rose to 3.94 percent at 8:40 a.m. in New York, from 3.90 percent late yesterday. Futures prices indicated a 38 percent chance of a half-point Fed rate cut on Dec. 11, down from 52 percent yesterday.

Job and wage growth have so far helped limit declines in consumer spending, which accounts for 70 percent of the economy. Companies filling more orders from overseas may be reluctant to lose workers even as a deepening recession in housing drags down economic grow.

ADP includes only private employment and doesn't take into account hiring by government agencies. Private payrolls rose by 104,000 a month on average from January through October, according to figures from the Labor Department.

Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

Today's report showed a decline of 8,000 jobs in goods- producing industries which include manufacturers and construction companies. Service providers added 197,000 workers to payrolls. Employment in construction fell by 6,000, the smallest decline since January, and financial firms added workers, ADP said.

Medium-Sized Firms

Companies employing more than 499 workers expanded their workforce by 30,000 in November. Medium-sized businesses, with 50 to 499 employees, added 82,000 and small companies increased payrolls by 77,000.

The economy probably created 70,000 last month, down from 166,000 in October, according to the median estimate of economists surveyed by Bloomberg News ahead of the Dec. 7 report from the Labor Department. The unemployment rate probably rose to 4.8 percent. Total job growth has averaged 125,000 a month this year, down from 189,000 in 2006.

ADP began keeping records in January 2001 and started publishing its numbers in 2006. The company says there is a 90 percent correlation between its revised data and the government's monthly private jobs figures.

After some early setbacks, the ADP report is increasingly considered a reliable indicator of the government's figures on payrolls. Earlier this year, ADP said it would change the way it adjusted the figures for seasonal variations in hiring. The sample size nearly doubled to cover almost 400,000 of ADP's customers.

The ADP report last month foreshadowed the Labor Department's report showing an unexpected jump in employment during October.

``The recent record as a predictor of private payrolls in the monthly employment report has been quite good,'' James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, said in a note to clients.

BLOOMBERG