ADP Employer Services Says U.S. Gained 40,000 Jobs

ADP Employer Services Says U.S. Gained 40,000 Jobs

Jan. 3 (Bloomberg) -- Companies in the U.S. added 40,000 jobs in December, a quarter of the previous month's gain, a private report based on payroll data showed.

The increase was more than forecast and followed a revised 173,000 rise for the prior month that was less than previously estimated, ADP Employer Services said today.

Hiring will soften as the prolonged housing slump and stricter borrowing rules hurt growth and erode confidence, economists said. The report may cause some economists to lower payroll forecasts before tomorrow's employment report.

``There's concern on the part of business leaders that the economy is at risk of a recession and they're preparing for that,'' Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report.

The ADP figures come ahead of a report tomorrow from the Labor Department that may show payrolls rose by 70,000 last month, less than in November, and the unemployment rate increased to 4.8 percent, according to the median forecast in a Bloomberg News survey.

The ADP report was forecast to show an increase of 33,000, according to the median estimate of 16 economists surveyed by Bloomberg News. Estimates ranged from a drop of 50,000 to a gain of 90,000.

ADP includes only private employment and does not take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

Construction Losses

Today's report showed a decrease of 31,000 jobs in goods- producing industries including manufacturers and construction companies. Service providers added 71,000 workers. Construction employment dropped by 17,000.

Companies employing more than 499 workers reduced their workforce by 35,000 jobs. Medium-sized businesses, with 50 to 499 employees, added 9,000 jobs and small companies increased payrolls by 66,000.

The ADP report is based on data from 392,000 businesses with about 24 million workers on payrolls.

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.

The ADP survey overestimated the number of private jobs created in November. Businesses hired 64,000 workers that month, according to the Labor Department's first estimate, compared with the 189,000 increase initially projected by ADP.

Firings

Housing and mortgage-related companies are trimming staff. Seattle-based Washington Mutual Inc., the largest U.S. savings and loan company, said in December it plans to eliminate 3,150 jobs. National City Corp., Ohio's largest bank, yesterday announced 900 more job cuts, raising its total to 3,400 positions reduced in the past year.

The housing market ``requires aggressive steps to overcome the near-term challenges,'' National City's Chief Executive Peter Raskind said in a statement.

Job creation has helped prevent a collapse in consumer spending, one reason why the U.S. has been able to avoid a recession so far. That resilience in employment may not last, some economists said.

The economy probably grew at a 1 percent pace in the fourth quarter after expanding at a 4.9 percent rate the previous three months that was the strongest since 2003, according to the median estimate of economists surveyed by Bloomberg News in December.

BLOOMBERG