WASHINGTON -- U.S. companies closed out 2017 with strong hiring in December, adding the most jobs in nine months.
Payroll processor ADP says that businesses added 250,000 jobs last month, up from 185,000 in November. The gains were led by robust hiring in health care, professional services such as accounting and engineering, and retail.
The figures suggest that businesses are optimistic about the economic outlook and are staffing up to meet greater demand. ADP's data bode well for the government's monthly jobs report, to be released today. Economists forecast that it will show a gain of 189,000 jobs, according to a survey by data provider FactSet.
The unemployment rate is projected to remain at a 17-year low of 4.1 percent.
The ADP numbers cover business payrolls and don't include government employment. They often diverge from the official figures.
The U.S. economy is growing at a steady clip, bolstered by a solid Christmas shopping season. Most economists expect tax cuts passed during President Trump's administration will accelerate growth in 2018 by roughly one-third of a percentage point.
That should bring down the unemployment rate to as low as 3.5 percent by the end of 2018, economists predict, which would be the lowest in nearly a half-century.
"The job market ended the year strongly," said Mark Zandi, chief economist of Moody's Analytics Inc. in West Chester, Pa. Moody's produces the figures with ADP. "Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat."
A category that includes retailers and shipping companies added 45,000 jobs, the most since last December. Online shopping has spurred shipping companies such as UPS to ramp up hiring over the holidays.
Consumers likely spent more because they anticipate some income gains from the tax cuts, Zandi said. Strong gains in the stock market in December also likely helped.
"My sense is the tax cuts probably have their fingerprints on the employment numbers," Zandi said.
Small businesses ended 2017 with a hiring boost, adding 94,000 jobs last month, ADP reported.
The increase followed the creation of 53,000 jobs in November, and was well above the 61,000 small companies added on average each month for all of 2017, according to ADP's tallies of hiring at its customers with up to 49 workers. The year saw wide swings in small-business hiring, with 126,000 jobs added in March and 28,000 cut in September because of Hurricanes Harvey and Irma.
The vast majority of the new jobs in December came at service companies, likely reflecting seasonal hiring at retailers and restaurants, but it was also a big increase from a year earlier, when 41,000 jobs were added. Consumer spending has been strong -- retail sales rose 0.8 percent in November after a 0.5 percent gain in October, according to the Commerce Department -- and that has made many business owners more confident about hiring.
ADP counted an average 70,000 new small-business jobs the last three months of 2017, but it's too early to tell if the hiring growth will continue. Many owners have said in surveys they'll hold on to the conservative hiring strategy they adopted since the recession began 10 years ago. While in the past small businesses would hire in anticipation of getting new business, now owners say they'll wait for revenue to increase significantly before they'll make staff additions.
Information for this article was contributed by Bloomberg News.
Business on 01/05/2018