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updated 1/5/2011 10:53:45 AM ET 2011-01-05T15:53:45

Private employers added 297,000 jobs in December -- far more than expected -- according to a report issued Wednesday that often serves as a bellwether for the government's monthly employment report.

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The employment gain reported by ADP Employer Services was the largest in the history of the report from the payrolls processor and nearly three times the 100,000 that was expected on average by economists.

Private employers added 92,000 jobs in November, according to a revised figure from ADP, which originally reported a gain of 93,000.

The report was one of several suggesting the sluggishly growing economy is beginning to gain momentum.

The U.S. non-manufacturing sector grew in December at its fastest pace in more than four  years, according to a report from the Institute for Supply Management.

And consultants Challenger, Gray & Christmas said the number of planned layoffs at U.S. firms fell in December to the lowest level since 2000, while the combined yearly total was the lowest since 2007.

The stock market, already at its highest level since the financial industry meltdown in 2008, was little changed in morning trading.

The ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, comes ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment.

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That report is expected to show a rise in overall nonfarm payrolls of 140,000 in December, based on a Reuters poll of analysts, but a rise in private payrolls of 145,000.

Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome.

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Employers announced 32,004 planned job cuts last month, down 34 percent from November, and down 29 percent from a year ago, according to Challenger, Gray & Christmas.

It was the lowest monthly total since June 2000, when employers cut 17,241 jobs.

Downsizing in 2010 totaled 529,973 lost positions, a 59 percent drop from the previous year. The 2010 total was the lowest since 434,350 job cuts were announced in 1997.

"The downsizing phase of the recession really came to an end in 2009. Job cutting fell dramatically in the second half of that year," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. "The pace of downsizing continued to slow in 2010 to levels we have not seen since before the 2001 recession."

Fewer jobs were eliminated in nearly every major industry in 2010, the Challenger report said. Layoffs in the automotive sector totaled 16,001, down 91 percent from a year ago. Retail employers — which cut 98,807 jobs a year ago — announced 38,751 layoffs in 2010, a decrease of nearly two-thirds.

Story: Fed: Economy still weak despite improvements

Government and non-profit employers, the year's largest job-cutting sector, showed a 17 percent drop in layoffs from a year ago, the report said. Still, Challenger said he expects the sector to experience painful cuts in 2011 due to budget shortfalls.

"The sector could see an increase in job cuts in 2011 as state and local agencies, which saw the heaviest downsizing last year, are joined by federal agencies under increasing pressure from a Congress determined to cut spending," he said.

Those polled by Reuters predicted combined private and public payrolls likely to rise by 140,000 jobs in December compared with November's addition of 39,000 jobs.

The Institute for Supply Management said its index of national services activity rose to 57.1 in December from 55.0 in November, The median forecast of 51 economists surveyed by Reuters was for a reading of 55.6.

A reading above 50 indicates expansion in the sector.

The reading was the highest since 57.2 in May 2006.

The Associated Press and Reuters contributed to this report.

Video: December jump in private employment


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