Upbeat U.S. data points to growth momentum

Reuters

* Private employers add 215,000 jobs in November

* Trade deficit narrows to $40.6 billion in October

* Services sector still expanding, new home sales surge

* Reports cast positive light on economy

By Lucia Mutikani

WASHINGTON, Dec 4 (Reuters) - U.S. private-sector hiring

rose in November at the fastest clip in a year, opening the door

wider for the Federal Reserve to start trimming its bond

purchases within the next few months.

Other data on Wednesday also pointed to a brightening

outlook, with the services industry expanding at a decent pace

last month and exports hitting a record high in October.

There was also good news on the housing market as new home

sales posted their largest increase in nearly 33-1/2 years.

"The economy seems to be building enough momentum that

growth should accelerate as we move through the first part of

next year," said Joel Naroff, chief economist at Naroff Economic

Advisers in Holland, Pennsylvania.

Private employers added 215,000 new jobs to their payrolls

last month, according to payroll processor ADP.

It was the biggest rise in a year and beat economists'

expectations for a gain of 173,000 jobs. At the same time, the

figure for October was revised up to 184,000 from 130,000.

The jobs data comes ahead of the government's much more

comprehensive employment count for November on Friday.

That report, which covers both public and private sector

hiring, is expected to show an increase of 180,000 in nonfarm

payrolls after a 204,000 rise in October, according to a Reuters

poll of economists.

Some economists said the ADP data suggested the government

report could show a larger gain than the consensus forecast.

Their optimism was tempered a bit by a gauge of services

industry jobs showing growth dropping to a six-month low for

November.

The upbeat tone was also captured by a separate report from

the Fed on Wednesday that described the economy as expanding at

a "modest to moderate pace" in October and early November.

The signs of economic momentum weighed on U.S. Treasury debt

prices as traders speculated the Fed could begin to trim its

bond-buying stimulus as soon as its next meeting on Dec. 17-18.

U.S. stocks were trading lower, while the dollar reversed gains

versus the euro and the yen.

"If the ADP does prove to be a good guide, a 200,000 plus

gain (in nonfarm payrolls) might just be enough to persuade the

Fed to begin its QE taper later this month," said Paul Ashworth,

chief U.S. economist at Capital Economics in Toronto.

Other economists said, however, the Fed was still more

likely to wait until January or March to reduce its current $85

billion a month bond-buying pace.

SERVICES SECTOR STILL GROWING

Separately, the Institute for Supply Management said its

services index fell to 53.9 last month from 55.4 in October.

A reading above 50 indicates expansion in the sector. November

marked the 47th straight month of growth in the services sector.

A sub-index of services industry employment fell to its

lowest level since May, but also stayed in expansion territory.

"The data are still suggesting at least a modest net pickup

in the trend in overall growth recently, even with this somewhat

weaker reading for November," said Jim O'Sullivan, chief U.S.

economist at High Frequency Economics in Valhalla, New York.

A separate report from the Commerce Department showed the

nation's trade deficit shrank 5.4 percent to $40.6 billion in

October, suggesting trade will likely contribute to growth this

quarter.

Exports, which had declined for three straight months, hit

an all-time high, pointing to a pick-up in global demand.

Imports also rose, reaching a 1-1/2 year high, as demand for

consumer goods and industrial supplies and materials increased.

"This is an encouraging sign for both U.S. manufacturing

growth and the state of global demand," said John Ryding, chief

economist at RDQ Economics in New York. "There is a marked

acceleration in the imports of capital goods, which may signal a

brighter picture for capital spending."

A survey of U.S. chief executives found spending on capital

goods and hiring were expected to rise in the next six months.

In October, petroleum exports were the highest on record.

Exports to China, Canada and Mexico reached all-time highs in

October, while exports to the 27-nation European Union also

gained.

In another report, the Commerce Department said new home

sales jumped 25.4 percent to a seasonally adjusted annual rate

of 444,000 units in October, more than unwinding September's 6.6

percent drop. That suggested the housing market recovery remains

intact despite higher mortgage rates.

"Today's data shows evidence of the persistence of the

positive momentum in the housing market," said Ward McCarthy,

chief financial economist at Jefferies in New York. "Strong new

home sales will translate into rising building permits and

housing starts."

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