Companies added more workers than anticipated in November, easing concern the job market is stagnating in the third year of the U.S. recovery, according to a private report based on payrolls.
The 206,000 increase was the biggest this year and followed a revised 130,000 gain the prior month, Roseland, New Jersey- based ADP Employer Services said today. The median forecast of economists surveyed by Bloomberg News called for an advance of 130,000.
A pickup in hiring will make it easier to sustain the recent gain in consumer spending, which accounts for about 70 percent of the economy. Overall payrolls rose by 122,000, still not enough to cut the jobless rate from 9 percent, economists in a Bloomberg survey projected ahead of a Labor Department report due in two days.
“Companies are going to ramp up a bit,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “We just have to let the economy build on its own momentum. Then we’ll be at a stage where demand creates employment which creates more spending.”
Last month’s initial ADP figures showed a 110,000 gain, while the Labor Department’s data two days later showed an increase of 104,000 in private payrolls for October.
Stock-index futures extended gains after the Federal Reserve and five central banks lowered interest rates on dollar swaps and China cut banks’ reserve requirements. The contract on the Standard & Poor’s 500 Index expiring next month climbed 3 percent to 1,232.6 at 8:33 a.m. in New York.
The projections for November ranged from 95,000 to 200,000, based on the estimates of 44 economists surveyed by Bloomberg.
Goods-producing industries, which include manufacturers and construction companies, had an increase of 28,000 workers, today’s figures showed. Employment in construction rose by 16,000, the most since November 2006, while factories added 7,000 jobs.
Service providers took on 178,000 workers.
Companies employing more than 499 workers added 12,000 jobs. Medium-sized businesses, with 50 to 499 employees, took on 84,000 workers and small companies increased payrolls by 110,000, ADP said.
Another report today showed employers announced fewer job cuts this month, according to figures from Chicago-based Challenger, Gray & Christmas Inc. Job-cut announcements dropped 13 percent in November from the same month in 2010.
Economic growth in the U.S. and other advanced economies “has been proceeding too slowly to provide jobs for millions of unemployed people,” Federal Reserve Vice Chairman Janet Yellen said in a speech at a San Francisco Fed conference yesterday. She called for “urgent” international action to combat a “dearth” of global demand.
Yellen said the central bank has leeway to spur the U.S. recovery and reduce unemployment by buying more assets or clarifying its plan to sustain record-low borrowing costs.
Fed officials have differed this month over whether additional stimulus may be needed to reduce unemployment more quickly. Policy makers next meet Dec. 13 in Washington.
Macy’s Inc., betting consumer spending will be sustained during the November-December holiday shopping season, was among companies that added staff. The second-biggest U.S. department- store chain said it was stepping up hiring of mostly part-time employees by 4 percent for the period.
Earnings growth is allowing some businesses to hire. Williams-Sonoma Inc., a retailer of high-end home goods, raised its annual profit forecast and will “continue to look for a few key jobs” in online sales, Chief Executive Officer Laura Alber said in a Nov. 17 conference call with analysts.
Companies remaining cautious include DirecTV, the largest U.S. satellite-TV provider, which this month said it will cut back on spending in 2012 to prepare for any slowdown in the economy.
The Labor Department’s report, to be released on Dec. 2, may show private payrolls rose by 146,000 in November, according to the Bloomberg survey median. Overall hiring, which includes government jobs, may have climbed after rising 80,000.
The ADP report is based on data from about 337,000 businesses with more than 21 million workers on payrolls. Macroeconomic Advisers LLC in St. Louis produces the data with ADP.