US Added 325,000 Jobs In December, Largest Gain Since 2010?

Payroll giant ADP says that the private sector added 325,000 jobs in December 2011, the largest increase since December 2010.

It’s also nearly twice the average increase since May, when pundits worried we were falling back into Recession 2.0.

Meanwhile, a separate report from the Labor Department says that initial unemployment claims last week dropped 15,000 to 372,000.

The four-week moving average continued to fall as well, to 373,250.

“The labor market is pretty much treading water, buts it’s definitely not as far behind as last year,” economist Aneta Markowska told Bloomberg Businessweek.

Some cautionary thoughts about the ADP number: first, it doesn’t reflect hirings or layoffs in the public sector, which has been slowly shrinking for months. Second, due to the “purge effect,” the number may be artificially high. Businessweek describes the purge effect thusly: ” Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses update, or purge, their figures with ADP. The paycheck processor estimates this change when adjusting its data for seasonal variations and, because there were fewer firings at the end of 2011 than in previous years, ADP may find it more difficult to formulate a projection.”

The Bureau of Labor Statistics releases its data for December unemployment tomorrow – we’ll see whether the numbers line up.