Private companies created far more jobs than expected in December, a bright sign for an economy that has been otherwise struggling, according to the latest numbers from ADP and Moody's Analytics.
Payrolls surged by 257,000, against economist expectations of 192,000, with gains evenly distributed among small, medium and large businesses, the report released Wednesday said. Professional and business services led the way with 66,000 new positions as service-related jobs overall accounted for 234,000 of the total.
Small businesses have led the way for most of the jobs recovery since the Great Recession, but it was large businesses — those with more than 500 employees — that created the most positions, with 97,000 added. Companies with fewer than 50 employees contributed 95,000 while medium-sized firms hired 65,000.
Markets had been slumping ahead of the announcement, with Dow futures off more than 300 points. The good jobs news had no market effect, however.
Officials who compiled the report offered no specific reason for the jobs jump in December, which will stand as the biggest month of the year for employment. The number represents a gain from the 211,000 rise in November, which was revised lower by 6,000.
"Strong job growth shows no signs of abating. The only industry shedding jobs is energy," Mark Zandi, Moody's chief economist, said in a statement. "If this pace of job growth is sustained, which seems likely, the economy will be back to full employment by mid-year. This is a significant achievement, given that the last time the economy was at full employment was nearly a decade ago."
The report comes amid a lackluster period for the economy. Lower-than-expected auto sales and a contraction in the manufacturing sector are among a number of factors that have led economists to downgrade sharply their projections for fourth-quarter growth, with many now expecting gross domestic product to gain only 1 percent or so for the final three months. The Atlanta Fed is expecting GDP gains of just 0.7 percent.
In addition to services, the trade, transportation and utilities sector added 38,000, while construction was up 24,000 and financial activities grew 13,000. Manufacturing, despite the worsening conditions, added a net 2,000 positions, according to the report.
The numbers come ahead of Friday's closely watched nonfarm payrolls report. Economists are expecting 200,000 total additions with the unemployment rate holding steady at 5.0 percent, according to FactSet, though the ADP/Moody's numbers could cause some upward adjustment.