Private sector job gains offer hope for labor market

Thu Jan 3, 2013 11:43am EST
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By Lucia Mutikani

WASHINGTON (Reuters) - Private-sector employers shrugged off a looming budget crisis and stepped up hiring in December, offering further evidence of underlying strength in the economy as 2012 ended.

While other data on Thursday showed an increase in the number of Americans filing new claims for unemployment benefits, the trend remained consistent with steady job growth.

"The underlying economy has momentum, and the employment data confirms that. The hope and prayer of the market is that our political leaders don't screw it up," said John Brady, managing director at R.J. O'Brien & Associates in Chicago.

Although Congress this week approved a deal to avoid the so-called fiscal cliff -- a combination of sharp government spending cuts and higher taxes that would have sucked about $600 billion from the economy -- the budget problems are far from resolved.

The ADP National Employment Report showed the private sector added 215,000 jobs last month after increasing their payrolls by 148,000 in November. The report is jointly developed with Moody's Analytics.

The job gains came even as companies worried the economy might fall off the fiscal cliff.

However, the ADP data tends to overstate job gains in December because of a year-end accounting quirk.

"While we are encouraged by the better tone in the ADP employment report, we are cautious about reading too much into it, particularly given its tendency to exaggerate the performance of the labor market in December," said Millan Mulraine, a senior economist at TD Securities in New York.   Continued...

Job seekers stand in line to meet with prospective employers at a career fair in New York City, October 24, 2012. REUTERS/Mike Segar