Strong Private Payroll Data in the U.S. Shows Economy’s Resilience

Private companies in the U.S. added workers at a strong rate during December, which pointed to the underlying strength of the economy despite the signs that there has been a slowdown in growth during the fourth quarter.

On Wednesday, other data showed a bit of moderation in the sector of services last month. Trade deficit was also narrowed during November as imports fell to their lowest point in close to five years; a sign the domestic demand was softening amidst an effort by businesses in the U.S. to trim their bloated inventories.

The trade and services reports added to the weak autos sales and construction data suggesting that the growth in the gross domestic product slowed almost to a crawl during the final three month last year.

The economy has been battling the impact from a strong dollar, bloat in inventory and the relentless spending cuts across the energy sectors, which have been hit hard by lower prices of oil.

ADP the payroll processor said the employment rose in the private sectors by 257,000 in December, the largest increase since December of 2014, after it increased by 211,000 during November.

However, the data from ADP tends to overstate gains in jobs for December because of an accounting quirk at year end. The report, which is developed jointly with Moody’s Analytics, is released prior to the governments jobs report on Friday that is much more comprehensive.

Economists estimate that nonfarm payrolls in December increased by 200,000, on top of November’s 211,000. The unemployment rate is expected to remain unchanged at 5%, which is a low of over 7 ½ years.

Strength in the labor market suggests that the economy’s fundamentals continue to be healthy and that some economists say keeps the U.S. Federal Reserve on course to place another rate increase during March.

The benchmark rate for overnight lending to banks was raised last month by the central bank by 25 basis points, which is the first that has been done in close to 10 years.

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