Companies in U.S. added 238,000 jobs in December, ADP says

Company Size

Companies employing 500 or more workers added 71,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 59,000 workers and small companies expanded payrolls by 108,000.

The Labor Department will release its December employment report on Jan. 10. The economy probably added about 195,000 jobs after 203,000 a month earlier, according to the median projection in a Bloomberg survey.

“Consumer spending has accelerated and sentiment has improved, which is likely indicative of better labor market conditions,” Bank of America Corp. economists led by Ethan Harris wrote in a research note last week. “We look for notable gains in manufacturing, retail and construction jobs.”

A pickup at factories is helping to support the expansion, now in its fifth year. Manufacturing grew in December at the second-fastest pace in more than two years, according to the Institute for Supply Management. The purchasing managers group’s factory index eased to 57 from the prior month’s 57.3, which was the highest since April 2011, the Tempe, Arizona-based group said last week.

Factory Orders

Orders reported by purchasing managers were the strongest since April 2010 and an employment gauge reached its highest level since June 2011 in the ISM data.

Among companies pointing to a brighter economic outlook is Dearborn, Michigan-based Ford Motor Co., even as the automaker’s December sales trailed analysts’ estimates.

“We’ve had pretty good growth in manufacturing, ongoing, well sustained,” Ellen Hughes-Cromwick, Ford’s chief economist, said on a Jan. 3 conference call. “Housing sector gains likely to improve again this year. Job and income gains have been relatively stable. Inflation has been well contained and long- term interest rates are likely to be edging up, but remain low by historical standards.”

Housing Market

Sustained momentum in the housing market recovery is supporting payrolls in the construction industry.

Purchases of new homes exceeded projections in November, holding near a five-year high. Sales declined 2.1% to a 464,000 annualized pace from a revised 474,000 rate in October that was the strongest since July 2008, according to Dec. 24 figures from the Commerce Department.

“The housing market remains on track for a solid recovery and is likely to continue to improve over an extended period of time,” Stuart Miller, chief executive officer of Miami-based homebuilder Lennar Corp., said on a Dec. 18 earnings call. “The short supply of available homes and pent-up demand, along with a generally improving economy, will continue to drive the housing recovery forward.”

ADP in October 2012 changed the method it uses to calculate its employment figures dating back to 2001. The report is now derived from a larger sample, and is released jointly with Moody’s Analytics.

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