ADP released a jobs number that was a pleasant surprise -- but it likely means there will be no surprise moves on interest rates.
America's private-sector employers added 216,000 new jobs in November, according to payroll processor ADP, setting the stage for a jobs report from the Labor Department on Friday and confirming the pattern of steady, modestly accelerating growth that could lead the Federal Reserve to raise interest rates on Dec. 14.
The gain is bigger than the revised 119,000 jobs added in October and exceeded economists' expectations for a 170,000-job gain. The surge in hiring is the longest in economic history and brings the U.S. close to full employment, said Mark Zandi, chief economist of Moody's Analytics, which compiles the data for ADP.
On Tuesday, Fed Governor Jerome Powell told the Economic Club of Indiana that "the case for an increase in the federal funds rate has clearly strengthened since our previous meeting earlier this month."
"The last time we were at full employment was almost a decade ago," Zandi said on a conference call with reporters. "It's quite an achievement. We should enjoy it.''
The strongest hiring came from large companies and service-providing companies, ADP reported. Large companies added 90,000 jobs, while companies with 50 to 499 workers added 89,000 and small businesses added 37,000. A 228,000-job gain at service companies accounted for all of the net hiring, as manufacturers like Boeing (BA) - Get Report and General Motors (GM) - Get Report , along with construction companies like Fluor (FLR) - Get Report and KBHome (KBH) - Get Report , shed 11,000 workers.
Within services, the biggest gains came at trade, transportation and utilities firms such as Southwest Airlines (LUV) - Get Report and Exelon (EXC) - Get Report , and at business-services companies like IBM (IBM) - Get Report and Accenture (ACN) - Get Report . Retailers like Walmart (WMT) - Get Report also hired heavily, but that may have partially reflected earlier-than-usual seasonal hiring, ADP said.
The economy still has "pockets of weakness" in manufacturing and oil drilling that were reflected in this month's election, Zandi said, referring to President-elect Donald Trump's triumphs in manufacturing-heavy states such as Michigan, Ohio and Pennsylvania.
Other economists pointed to the downward revision in October's data as a reason to be less than impressed, but also pointed to the strong hiring by large companies as an encouraging sign.
"You can't take the November headline without the revision to October, which was also a big number, but a big downward revision," Regions Financial chief economist Richard Moody said. "November reflects a lot of hiring in the services industries, a good part of which is holiday-related hiring. Take the two months together and the view of the labor market does not change."
But Joel Naroff, president of Naroff Economic Advisors, was encouraged by the pickup in hiring at large companies, which he said might foreshadow an increase in capital spending.
"Key is that large companies are finally hiring again," Naroff said in an e-mail.
The economy is getting strong enough that investors should brace for more than one interest-rate hike, Zandi said.
"The Federal Reserve is going to have to raise rates in a more consistent way going forward," he said.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.