WASHINGTON: Hiring by private US firms surged in December far more than expected, with nearly all of the gain concentrated in the services sector, payroll firm ADP reported Thursday.
The service sector has long been a bulwark of the economy, but hiring by providers saw the biggest increase in 18 months, which more than offset the slower hiring by goods-producing companies.
Total private employment roared back from the slower but still-strong November figures with an increase of 250,000, including 222,000 in the services sector, according to the report that is closely watched for hints of what is to come in the key government jobs report due out Friday.
The ADP total far surpassed the 190,000 consensus estimate by economists, and could signal a strong December payrolls report.
Especially strong areas were professional and business services, with 72,000 more employees, and education and health services, which added 50,000.
The goods-producing sector employed 28,000 more workers last month, which was a big drop from the prior month, but fairly strong for the final month of the year, especially with 16,000 added in construction.
But manufacturing employment slowed to just 9,000 after four solid months, although the November gain, initially reported as the strongest on record, was revised down by 10,000 to a more routine 30,000.
"We've seen yet another month where the labor market has shown no signs of slowing," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
Mark Zandi, chief economist of Moody's Analytics, said the continued hiring trend points to potential concerns about how long the economy can sustain the pace.
"The tight labor market will get even tighter, raising the specter that it will overheat," he said in a statement.
That could become a concern if rising wages translate to higher inflation, which in turn could cause the Federal Reserve to accelerate increases in the key lending rate. But wages gains have been slow so far.
The consensus forecast for the Labor Department's nonfarm payrolls report is for an increase of 188,000 in December, with a gain of 185,000 expected for private employment.
The ADP report covers 411,000 firms and 24 million workers and is used as a signal of the overall labor market, even while it does not always track the official jobs report closely, since the two reports use different data.
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