It’s another green session for the market as some optimistic economic data brought the major equity indices out of negative territory. In fact, the Dow Jones Industrial Average managed to touch yet another all-time intraday high above 17,900. Clearly the notion that the index may reach 18,000 before year-end is no longer a farfetched idea. Oil prices are calmer today, trading roughly flat for the session despite natural gas prices declining by nearly 2.8%. Weekly crude inventories showed a draw of 3.689 million barrels which consensus called for a build of 1.5 million barrels. As such, the markets got a nice lift driven by oil producers which shows that even though the price of oil is low, producers are shifting their levels to match demand. The twelve US Federal Reserve districts will be giving business updates in the Beige Book later this afternoon, but until then, there was some rather compelling economic data giving the markets a lift.

Firstly, ADP's estimate for private payroll growth for November came in at 208,000 which was lower compared to the consensus estimate for 225,000 jobs and against an upwardly revised 233,000 jobs (from 230,000) for October. The corresponding consensus reading for Friday's jobs report from the Bureau of Labor Statistics is 225,000, which is well above October's reading of 209,000. The goods-producing sector added 32,000 jobs in November while the service-providing sector added 176,000 jobs. Across all industries, there was notable growth in construction (+17,000), manufacturing (+11,000), trade/transportation/utilities (+49,000), financial activities (+5,000) and professional/business services (+37,000). The following chart shows that despite the dip in total jobs added, levels are still far higher than they were at the beginning of the year.

When broken out by segment and size, there were clearly more additions in small, service-producing firms. In both segments, the addition of jobs in small firms is incredibly encouraging as it means small businesses are feeling more confident in the economy and are willing to take on more payrolls.

Third quarter productivity and labor costs were revised with some mixed results. Nonfarm productivity growth for the third quarter was revised up to an annualized rate of 2.3% from the first estimate of 2.0% and following a 2.9% boost in the second quarter. Unit labor costs were revised down notably to -1.0% from a first estimate of +0.3% and after falling an annualized 3.7% in the second quarter of this year. Additionally, output growth slowed to 4.9% in the third quarter, following a 5.5% jump the prior quarter. Compensation growth in the third quarter was up 1.3% on an annualized basis after declining by 0.9% in the second quarter. Year-over-year, productivity levels were up 1.0%, which is down from 1.3% in the second quarter. Labor costs relative to a year ago were up 1.2%, compared to the +0.7% reading in Q2. Most importantly, this report points to positive company profits during the quarter and relatively mild gains in consumer income.

Lastly, ISM’s November reading of non-manufacturing (services) purchasing managers’ index (PMI) came in at a respectable 59.3 compared to the 57.1 reading in October. Other than the 59.6 reading in August, November’s reading is at a recovery high going back more than nine years. New orders were actually quite strong at 61.4, up 2.3 points from the month before, with backlog orders up a large 4.0 points to 55.5 which was a reading last seen in April 2011. Strength in new orders is causing a boost in business activity, which increased by 4.4 points to a reading of 64.4. Employment declined by 2.9 from October’s near-record level of 59.6; however this is still quite a solid reading. Delivery levels slowed while inventories rose, which points to some strength as firms are restocking at responsible levels. Pressures on input prices rose a bit to 54.4 which, however, this is still considered benign for this reading. Retail was the best performing sector, which is good news going into the holiday season. Construction activity is also high for the month, which is more good news. All in all, ISM’s reading should indicate solid year-end acceleration for the economy, though may spark the interest rate debate again at the Fed.