U.S. private-sector employers stepped up hiring in December, suggesting some momentum in the economy as the year ended, even as a budget crisis loomed.
While other data on Thursday showed an increase in the number of Americans filing new claims for unemployment benefits, the trend remained consistent with steady job growth.
"The underlying economy has momentum, and the employment data confirms that. The hope and prayer of the market is that our political leaders don't screw it up," said John Brady, managing director at R.J. O'Brien & Associates in Chicago.
The ADP National Employment Report showed the private sector added 215,000 jobs last month, comfortably above economists' expectation of a 133,000 gain. The report is jointly developed with Moody's Analytics.
The increase came even as companies worried the economy might fall off the "fiscal cliff" at year end, which would have meant higher taxes and, some predicted, suppressed hiring.
In a separate report, the Labor Department said initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 372,000 last week. However, claims data for nine states, including California and Virginia, was estimated because of the Christmas and New Year holidays.
The U.S. dollar pared losses versus the yen and extended gains versus the euro after the data. U.S. Treasury debt prices turned negative, while stock futures were trading lower.
The four-week moving average for new claims, a better measure of labor market trends, rose 250 to 360,000.
The government is expected to report on Friday that employers added 150,000 jobs to their payrolls in December, little changed from 146,000 in November, according to a Reuters survey of economists. The jobless rate is seen holding at 7.7 per cent.
Job gains in the first 11 months of last year averaged about 151,000 per month, not enough to significantly lower unemployment. Employers' hesitancy to ramp up hiring had been blamed on the so-called fiscal cliff, a combination of sharp government spending cuts and higher taxes.
Although Congress this week approved a deal to avoid the fiscal cliff, the budget problems are far from resolved. That could continue to cast a shadow of uncertainty and hurt job growth.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 44,000 to 3.25 million in the week ended Dec. 22.
A third report showed planned layoffs at U.S. firms fell in December for the first time in four months, while the overall job-cut total in 2012 was the lowest since 1997.
Employers announced 32,556 job cuts last month, the second lowest monthly total of 2012 and down 43 per cent from 57,081 in November, according to the report from consultants Challenger, Gray & Christmas, Inc.