(Kitco News) – The labor market continues to build momentum as U.S. companies created 257,000 new private-sector jobs last month, well above expectations, according to a report released by payrolls processor ADP Wednesday.
Ahead of the report, consensus estimates were expecting to see gains of around 190,000 jobs. November’s employment numbers were also revised higher to 211,000 jobs from the initial report of 196,000 jobs. According to the data, this is the strongest report of since December 2014.
For the second consecutive month, the report showed broad-based gains in the U.S. economy. Breaking down the gains by business size, small businesses created 95,000 new jobs, midsized businesses created 65,000 new positions and large corporations created 97,000 new jobs.
In a sector and industry breakdown, the service providing sector continues to dominate the labor market with 234,000 jobs created last month; the good producing sector created 23,000 jobs; the construction industry created 24,000 jobs, 2,000 new positions were created in the manufacturing sector; the trades, transportation and utilities sector created 38,000 jobs; the financial sector created 13,000 jobs and the professional business sector created 66,000 new positions.
Royce Mendes, senior economist at CIBC World Markets, said that although the U.S. economy remains fragile, the latest ADP report shows the labor market is still growing at a healthy pace. He added that although the private-sector report does not have a good correlation with Friday’s official government employment report, it could create some upward risk to current forecast. Currently consensus estimates are calling for Friday’s nonfarm payrolls report to show a gain of around 194,000 jobs.
“If Friday’s release does show the same type of strength, that’s one box that will likely to be ticked for another Fed hike in March,” he said.