ADP: Private Sector Adds 238,000 Jobs in December

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Detroit, Michigan. Veterans of the military look for jobs at Hiring Our Heroes, a job fair sponsored by the U.S. Chamber of Comm
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By Jeff Cox

Private sector job creation continued at a healthy clip in December, with companies adding a better-than-expected 238,000 positions despite the inclement weather.

ADP (ADP) and Moody's Analytics said the month was the best for 2013 and pointed towards a solid number when the government releases its nonfarm payrolls report Friday.

Economists expected the ADP/Moody's Analytics report to show the private sector created 200,000 positions in December, down slightly from the 215,000 initially reported for November.

"This is it. We're off and running," Moody's economist Mark Zandi told CNBC. "We've jumped to a new level of growth."

Among the highlights: Construction jobs grew by the largest monthly number since 2006, adding 48,000, while goods-producing industries contributed 69,000.

Overall, professional and businesses services again led the way with 170,000 new jobs, down a shade from November's 182,000.

The big number could sway economists to change their view of the monthly unemployment report from the Bureau of Labor Statistics, which is expected to show 196,000 additional positions, all but 1,000 from the private sector.

Deutsche Bank (DB) quickly revised its forecast, with Joe LaVorgna, the firm's chief U.S. economist, tweeting that he was raising his forecast.

Moreover, the ADP report helps justify the Federal Reserve's gradual move away from its $85 billion a month bond-buying program known as quantitative easing. The U.S. central bank's Open Markets Committee voted last month to cut the program by $10 billion a month. FOMC minutes to be released later Wednesday should shed more light on the Fed's decision-making process and how big a role employment improvements have played.

The jobs numbers also refuted the notion that the snowy and cold December might depress job creation.

"There were some concerns we heard ahead of today's blowout ADP number that cold weather may have thwarted hiring in December," Andrew Wilkinson, chief market strategist at Interactive Brokers, said in a note. "Perhaps that's a story for January as record low temperatures disrupt the economy."

Small businesses drove December's gains, adding 108,000 positions. Large businesses provided 71,000 jobs while medium-sized firms generated 59,000.

In industries, professional business services added 53,000 while trade, transportation and utilities generated 47,000 and manufacturing grew 19,000.


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ADP: Private Sector Adds 238,000 Jobs in December
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
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