WASHINGTON: Hiring by private US companies surged unexpectedly in December, rising to its highest level in nearly two years as employers beefed up staffing levels in the holiday period, a survey showed Thursday.
The result shattered economists’ forecasts, showing that employers continued to add workers despite fears of a slowing economy, a stock market slump and a trade war with China.
The private sector added 271,000 net new positions for the month, soaring above expectations of only 170,000 new hires, according to the payrolls firm ADP.
November’s result was revised downward, however, to 157,000, a dip of 22,000.
The survey came a day before the federal government is due to release its more closely-watched monthly report for December. However, the two are frequently out of step.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said holiday hiring had jumped in trade, leisure and hospitality.
“Small businesses also experienced their strongest month of job growth all year,” he said in a statement.
The ADP report is derived from actual payroll data and covers nearly 24 million workers.
Ian Shepherdson of Pantheon Macroeconomics said calling the result “startling would be something of an understatement” – noting that the survey had previously undershot forecasts for 18 months.
“We don’t know what prompted the sudden closing of the gap in December,” he said in a client note, adding that data might be compensating after months of hurricanes, cold weather and California wildfires – “or it might be noise.”
The rosy numbers failed to lift the gloom on Wall Street, with the three major indices closing down sharply after iPhone maker Apple cut sales forecasts due to weakness in China and survey data showed slowing US manufacturing activity.
Despite robust hiring and historically low unemployment, markets now expect the Federal Reserve will not raise interest rates any further in 2019 as GDP growth cools.
Thursday’s numbers nevertheless suggested the jobless rate, currently at 3.7%, could continue to fall, adding to pressure on the central bank to continue tightening.