Companies added more workers in November than forecast, a sign the labor market continues to strengthen, a private report based on payrolls showed.
The 217,000 increase in employment was the biggest in five months and followed a 196,000 rise in the prior month that was more than previously reported, according to figures released Wednesday from the ADP Research Institute in Roseland, New Jersey. The November gain exceeded the highest projection of economists in a Bloomberg survey.
Companies are adding employees and retaining those already on their payrolls as a tighter labor market makes it difficult for them to find skilled and experienced workers. Federal Reserve policy makers are closely monitoring progress toward full employment as they consider whether the economy is strong enough to withstand an increase in their benchmark interest rate, a decision that may unfold in two weeks.
“Job growth remains strong and steady,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in a statement. Moody’s produces the figures with ADP. “The economy is fast approaching full employment and will be there no later than next summer.”
The median forecast in the Bloomberg survey called for a 190,000 increase, with estimates ranging from 150,000 to 210,000. The prior month’s figure was previously reported as an advance of 182,000.
Goods-producing industries, which include manufacturers and builders, increased headcounts by 13,000, the ADP report showed. Hiring at factories climbed by 6,000, while construction companies added 16,000 jobs.
Payrolls at service providers rose by 204,000 in November, led by a 59,000 jump at professional and business services.
Companies employing 500 or more workers added 74,000 jobs. Medium-sized businesses — those with 50 to 499 workers — boosted headcount by 62,000 and small companies took on 81,000 workers.
The ADP figures are based on data from businesses with almost 24 million workers on their combined payrolls.
The report precedes the November jobs report, published by the Labor Department, that’s expected to show employment growth cooled to a more sustainable level after an October surge. Companies took on 200,000 workers last month following a 271,000 increase in October that was the most this year, according to the median forecast of economists surveyed by Bloomberg.
Private businesses may have added 190,000 workers after rising 268,000 the month before, the survey projections also showed. The unemployment rate probably held steady at 5 percent, a seven-year low.
Fed policy makers will use the jobs data to help determine how close the economy is to full employment, part of their dual mandate that also includes steady price growth. The Federal Open Market Committee is widely expected to lift the benchmark federal funds target range above its near-zero setting, where it has been held since December 2008.
In recent months, the Fed has signaled that an initial hike hinged primarily on lowering unemployment. The U.S. jobless rate is now at or very close to most policy makers’ estimates of full employment.
© Copyright 2023 Bloomberg News. All rights reserved.