Companies added more workers than projected in September, evidence the labor market may be perking up, a private report based on payrolls showed.
The 162,000 increase in employment followed a revised 189,000 jump in August, figures from Roseland, New Jersey-based ADP Employer Services showed today. The median forecast of 38 economists surveyed by Bloomberg projected a 140,000 advance.
The hiring gains, which were led by companies with fewer than 500 workers, will help shore up consumer confidence and spending, which in turn will bolster economic growth. A Labor Department report on Oct. 5 may show private payrolls increased by 128,000 in September and unemployment rose to 8.2 percent from 8.1 percent the prior month, according to the Bloomberg survey median.
“Small and medium-size firms continue to be the driving force behind job growth,” Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, said in a research note. “Hiring at startup and small firms will continue to be the key to the sustainability of the labor market recovery going forward.”
Stock-index futures rose after the report. The contract on the Standard & Poor's 500 Index maturing in December climbed 0.1 percent to 1,442.6 at 9:09 a.m. in New York.
Estimates for the ADP employment figures ranged from 90,000 to 190,000 in the Bloomberg survey.
Over the two years ended August, ADP's initial release has understated or overstated the Labor Department's initial private payroll figure by an average of 66,000, according to Bloomberg calculations. The average miss by economists in the Bloomberg survey over the same period was 58,000.
Goods-producing industries, which include manufacturers and construction companies, increased workers by 18,000, today's ADP figures showed. Construction employment rose by 10,000, while factories employment climbed 4,000.
Service providers added 144,000 workers.
Companies employing more than 499 workers increased payrolls by 17,000 jobs. Medium-sized businesses, with 50 to 499 employees, added 64,000, and small companies added 81,000, ADP said.
This week's Labor Department report may show overall hiring including government jobs climbed by 115,000 last month after rising 96,000 in August, according to the Bloomberg survey median. The jobless rate has held above 8 percent since February 2009, the longest stretch since monthly records began in 1948.
Fed's Plan
Federal Reserve Chairman Ben S. Bernanke this week renewed the central bank's pledge to sustain record stimulus to support the labor market even if the U.S. expansion gains strength.
“We expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens,” Bernanke said in an Oct. 1 speech. The Federal Open Market Committee said last month it will buy $40 billion of mortgage debt a month until the labor market shows “sustained improvement.” It also extended its horizon for low interest rates to at least mid-2015.
The ADP report is based on data from businesses that collectively employ more than 21 million workers. Macroeconomic Advisers LLC in St. Louis produces the data with ADP.
Bloomberg News
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