U.S. private employers stepped up hiring in November and consumer spending increased last month, the latest signs of economic strength that could further cement the case for an interest rate hike from the Federal Reserve next month.
The data on Wednesday also showed income rising solidly and savings climbing to a seven-month high in October, positioning households to boost spending in the future.
“There is nothing in today’s reports that put a roadblock in front of a Fed rate hike in December. The economy continues to move ahead powered by the American consumer who has got the income to both spend and save for a rainy day,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
The ADP National Employment Report showed that private payrolls increased by 216,000 jobs this month, well above economists’ expectations for a gain of 165,000 jobs. The report is jointly developed with Moody’s Analytics.
The ADP figures come ahead of the Labor Department’s more comprehensive employment report on Friday, which includes both public and private sector payrolls. Economists polled by Reuters are looking for nonfarm employment to have risen by 175,000 jobs in November after increasing by 161,000 jobs in October.
In a separate report, the Commerce Department said consumer spending, which accounts for about 70 percent of U.S. economic activity, increased 0.3 percent after an upwardly revised 0.7 percent gain in September. Spending in September was previously reported to have risen 0.5 percent.
A third report showing a marginal increase in contracts to buy previously owned homes last month, however, put a wrinkle in an otherwise brightening economic outlook.
The consumer spending and private hiring reports added to data on residential construction, home sales, inflation and manufacturing that have suggested the economy sustained its momentum early in the fourth quarter after growing at its quickest pace in two years in the July-September period.
The government reported on Tuesday that gross domestic product increased at a 3.2 percent annual rate in the third quarter, driven by strong consumer spending and a surge in soybean exports.