Businesses hired more employees than expected in October, indicating that job growth is set to record its strongest performance in 15 years, reported the ADP Research Institute.
Companies hired 230,000 workers last month, the highest level since June, after employing 225,000 workers a month earlier. Economists surveyed by Bloomberg News had expected 220,000 workers to be hired.
The improving labor market has fuelled an increase in consumer spending amid slowdown in the global economy, aided by declining fuel prices. Despite this, wage growth should accelerate in order to boost consumer spending, which contributes about 70 percent of the U.S. economy.
“Demand is improving and businesses can’t count on productivity gains so they need to hire workers to meet that stronger demand,” Gus Faucher, a Pittsburgh-based economist at PNC Financial Services Group Inc, told Bloomberg News. “The economy is growing, and not just in a few industries, but pretty broadly. And job growth reflects that because we’re seeing broad-based job growth as well.”
Companies that produce goods, including construction firms and manufacturers, boosted payrolls by 48,000 last month, ADP’s report showed. Factories employed 15,000 workers while jobs in construction sector grew by 28,000. Service providers absorbed 181,000 new workers.
Companies that have at least 500 workers hired 5,000 workers, while medium-sized firms, which have 50 to 499 workers, absorbed 122,000 workers into their payrolls. Smaller firms employed an additional 102,000 workers. The ADP sources its data from companies that have employed nearly 24 million workers.
The improved hiring is one of the key parameters that the Federal Reserve is keenly monitoring in order to determine the pace of interest rate increases. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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