Private report: U.S. added 300,000 jobs

NEW YORK -- Companies added nearly 300,000 jobs in December, according to an unofficial count by a private payroll firm -- more than in any month in the past decade. The news raised hopes that the government's official report Friday on last month's job creation could be a blockbuster.

While there were reasons to doubt the numbers, the report from Automatic Data Processing, and another showing strength in the nation's service industries, reversed what was shaping up to be an ugly day on Wall Street. It also generated optimism that the unemployment rate might finally start to fall.

Some local companies say they also saw stronger-than-usual hiring in December, though they also remain loath to call the uptick permanent.

Large-format printer Altitude Color Technologies added an employee in December to its staff of 23, thanks to a blockbuster month resulting from the International Consumer Electronics Show, in town through Sunday. Altitude generates backdrops, banners, table covers and other necessities for exhibit booths at the convention, and December provided the best last month of the year for sales that the company has enjoyed since it opened in 1998, said Jennifer Folk, vice president of marketing and business development. What's more, 2010 was the company's best sales year since 2006. If the trend continues, Altitude could hire two to three more people in 2011, Folk said.

Still, Folk sounded notes of caution as well.

"I wouldn't say by any means that we're back where we were," she said. "But definitely for us, it seems like we're headed in the right direction. It's not as glum as it was a year ago for sure. We're not at the light yet, but we can definitely see the light at the end of the tunnel."

Greg Hawthorne, president of Hawthorne Plumbing, Heating and Cooling in Las Vegas, expressed a similar mix of optimism and prudence.

Hawthorne's company added three employees to its 18-person staff last month, thanks in part to a 15 percent jump in work volumes from November to December.

Hawthorne said he's not sure why sales spiked so much in one month, but he noted that his company worked hard in 2010 to build a customer base as it switched from a construction-oriented vendor to a service-based company, and those efforts may have finally started paying off toward year's end.

Plus, with times still relatively tough in Las Vegas, property owners remain more interested in repairing existing systems than in buying new ones, Hawthorne said.

It's Hawthorne's biggest hiring jump since the company's service transition, but staffing counts run starkly below what they were before the downturn. The business had 65 employees at the end of 2009, Hawthorne said. He added that he's not sure the sales gains are permanent, so he'll continue to keep his overhead low in case the hard times stick around.

"We're hoping this new trend continues, but we're still a little wary," he said. "I don't think Las Vegas is there yet. I think people are starting to loosen up a little bit, and everybody at least has a more positive outlook now. But people are also afraid that there might be a collapse with commercial properties, so at this point, we're waiting for another shoe to drop."

Some economists expressed skepticism about ADP's monthly figures because they often don't track the official government employment data. Others said that the report's estimate of job gains was so high that it at least reinforced evidence that hiring is picking up as employers gain more confidence.

Diane Swonk, chief economist at Mesirow Financial, says the ADP numbers suggest the Bureau of Labor Statistics could report Friday that the economy created more than 300,000 jobs last month.

Economists have been predicting fewer than half as many -- 145,000.

It takes about 125,000 new jobs a month just to keep up with population growth and hold the unemployment rate -- now 9.8 percent -- stable. It takes up to 300,000 new jobs a month to reduce the unemployment rate significantly, economists say.

The report is just the latest sign that the job market might be turning around at last. The Labor Department said last week that the number of people applying for unemployment benefits has fallen to its lowest point in two and a half years. The staffing firm Challenger, Gray & Christmas said Wednesday that layoffs fell last month to the lowest level since June 2000.

And big companies, which have been slow to commit to hiring full-time workers, are starting to do so again. Discount retailer Dollar General this week said it plans to hire more than 6,000 workers in 2011. Union Pacific, the nation's largest railroad, plans to replace 4,000 workers -- about 10 percent of its total staff -- who are set to retire in 2011. It's also recalling some employees who were furloughed during the recession.

Economists had expected the ADP numbers, the first major snapshot of hiring in December, to show that private employers added 100,000 jobs last month. The actual figure, 297,000, was "a bolt from the blue," says Ian Shepherdson, chief U.S. economist at High Frequency Economics.

In part because of that powerful number, the Dow Jones industrial average edged higher for the third day in a row. The Dow closed up nearly 32 points, or about 0.3 percent, and broader stock averages posted larger gains. Before the ADP issued its report, futures markets had suggested the Dow was headed for a steep loss.

Yet many economists are unconvinced by the ADP report. Zach Pandl of Nomura Securities says the report has a "spotty track record" in aiming to predict what the official government numbers will show.

For example, ADP's figures suggest that private-sector employers added an average of about 35,000 jobs a month last year through November. By contrast, data from the Bureau of Labor Statistics show an average of several times that -- about 100,000 new net jobs. Over the past decade, the difference between the two sets of numbers has been much narrower: about 4,500 jobs a month.

Review-Journal writer Jennifer Robison contributed to this report.