Employers in the private sector added 238,000 jobs from November to December, according to a report released Wednesday by payroll giant ADP, with jobs added across most company sizes and industries as the economy continues to strengthen.
Small businesses with one to 19 employees gained 55,000 jobs, while those with 20 to 49 employees added 53,000 jobs. Midsize businesses with between 50 and 499 employees added 59,000 jobs. Large businesses with 500 to 999 employees lost 3,000 jobs, but those with 1,000 employees or more gained 74,000 positions.
The service sector led the way, adding 170,000 jobs, while the goods-producing sector added a more modest 69,000 jobs.
Professional and business services, including accounting and tax preparation along with other services, posted the biggest increase, gaining 53,000 jobs in December. It was followed by the construction industry with 48,000 jobs, the combined trade, transportation and utilities sector with 47,000 jobs, the manufacturing industry with 19,000 jobs and the financial activities sector with 10,000 jobs.
“The job gains were broad based across industries and across company sizes,” said Mark Zandi, chief economist of Moody’s Analytics, which compiles the monthly national employment reports with ADP, during a conference call with reporters. “Most notable was a significant increase in construction jobs, which highlights the growing importance of the housing recovery to the job market. We saw solid gains in manufacturing and across the board, with gains across small companies, midsize and big companies all adding consistently. It feels like the job recovery has kicked into a higher gear.”
The job gains are consistent with other economic data Moody’s has been tracking, with GDP growth accelerating to over 4 percent, along with improvements in business confidence across various industries.
“After the government shutdown came to an end and the Treasury debt limit was increased back in late October and early November, confidence has surged,” said Zandi. “It is now at a new record high and the gains in confidence are broad-based across lots of industries. My sense is that businesses are now feeling good and engaging, and the hiring rates are finally picking up. It’s been a long time coming. We’ve been long anticipating this pickup, but it feels like it’s happened. The light switches have been going on in board rooms and CEOs are deciding that it’s time to expand operations and hire more. At this pace of job growth of 200,000 to 250,000 per month, unemployment will decline quickly. The unemployment rate is 7 percent. At the current pace of job growth, it will be closer to 6½ percent by year’s end, 6 percent by the end of 2015, and we’ll be closing in on full employment, which by my estimate is an unemployment rate of 5½ or 5¾ percent, by the end of 2016.”
Despite the improvement in the job market, however, Zandi believes it would be appropriate to extend the Emergency Unemployment Compensation program, since the unemployment rate is still relatively high at 7 percent nationally, and even higher in some parts of the country.
“The program is designed to expire as unemployment declines,” he pointed out. “I think it would be appropriate and helpful for the economy and the job market if the program were extended. Ideally it should be paid for, but I don’t know that should be a necessary pre-condition for extending the program.”
Although the economic recovery has been shaky in recent years, Zandi sees positive signs of growth.
“We’ve had a lot of false starts,” he said. “There have been head-fakes before and it’s possible that we’re being head-faked again, but this time it really does feel more fundamental, more real, more broad-based. I think we’re off and running. The growth rates in the economy have accelerated, and we’re now going to start to see an economic recovery more typical of the kinds of recoveries we’ve historically seen in the post-World War II period, so I would say it’s very, very good news.”