Employment jumped significantly in December, according to Automated Data Processing (ADP), with 325,000 net new nonfarm private payrolls added for the month. The service sector accounted for 273,000 of those gains, with the goods-producing sector adding 52,000.
This was the largest positive monthly change since ADP began calculating payroll changes in December 2000; in this recent recovery, the second-largest monthly change was December 2010, which experienced a gain of 246,000 net new jobs.
Manufacturing employment was also much higher, adding 22,000 net new jobs in December. This matched its gain from June, ending a five-month malaise (at least for now) of slow job growth. Hopefully, this is a sign of better things to come as we move into 2012.
As with previous ADP reports, the bulk of the net new jobs stemmed from small and medium-sized payrolls (e.g., those with less than 500 employees). Of the 325,000 net new jobs created in December, 148,000 stemmed from small establishments with less than 50 employees, and 140,000 flowed from medium-sized entities with 50 to 499 employees.
These numbers suggest that employment growth has picked up its pace from recent weaknesses. For manufacturers, these results mirror regional sentiment surveys which have found an increased ability to start hiring again.
A similar finding will probably be found in tomorrow’s employment report from the Bureau of Labor Statistics; although, the current consensus forecast for nonfarm payrolls from BLS is closer to a net increase of 150,000 (rather than ADP’s larger figure). In addition, economists will be closely watching the unemployment rate, which unexpectedly dropped to 8.6 percent in November.
Chad Moutray is chief economist, National Association of Manufacturers.