United States factory activity edges up; private payrolls surge

In the bond market, benchmark 10-year Treasury yields were up 3 basis points at 2.225 percent, while the German counterpart was marginally higher at 0.310 percent. Large businesses added 57,000 jobs.

The U.S. dollar rose against other major currencies on Thursday on upbeat economic data. "Unless we have a real weak employment data tomorrow I think it's a go-ahead for the Fed to raise rates in June", said Peter Cardillo, chief market economist at First Standard Financial in NY. Economists are expecting a non-farm payrolls gain of 185,000 in May alongside a steady unemployment rate of 4.4% and a 0.2% increase in average hourly earnings.

Federal Reserve monetary policymakers are watching the labor market closely to determine whether the economy is strong enough for another increase in a key short-term interest rate.

The payroll and human resources company said in its monthly National Employment Report that the US added 253,000 private-sector jobs from April to May, up from the prior period's figure of 177,000 jobs gained.

But ADP's figures can vary widely from the government's, as they did in March, when they reported much stronger growth, and in April, when they indicated weaker job creation. "The rebound in April employment suggests these factors have largely played out and, alongside claims data that show some improvement in the separation side of the market, we look for another month of solid employment growth".




In a third report yesterday, the Labour Department said initial claims for state unemployment benefits jumped 13,000 to a seasonally adjusted 248,000 for the week ended May 27.

On Thursday, we got the first two labor market data points of the week, with the highlight coming from research institute ADP.

"We think it's consistent with continued progress in the economy and possibly a hike in September", said John Herrmann, director of interest rates strategy at MUFG Securities in NY.

A Labor Department official said claims for California, Hawaii, Kansas, Kentucky, Louisiana, North Dakota, Texas and Virginia were estimated because of the Memorial Day holiday on Monday.

As payrolls continue to climb, however, many employers are facing a shortage of available labor, as we saw in the Federal Reserve's latest Beige Book report this week. Almost 40 percent of the job cuts were announced by Ford Motor Co (F.N), according to the report.

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