U.S. private employers added more jobs than expected last month, though the lack of robust labour market growth reinforced the U.S. Federal Reserve's expectations for moderate economic growth.
The ADP National Employment Report showed on Wednesday the economy's private sector added 110,000 jobs in October, topping economists' expectations for a gain of 101,000 jobs. ADP also increased September's job additions, to a gain of 116,000 from the previously reported 91,000.
The Fed gave a moderately brighter economic outlook at the end of its two-day meeting, saying economic growth strengthened somewhat in the third quarter as temporary factors reversed.
Still, the central bank flagged risks to growth and said it continued to expect a moderate pace of economic growth over the coming quarters with the jobless rate declining only gradually.
There is a recognition that things have improved as they had expected. It's a relief more than anything else. We are clearly not out of the woods, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, of the Fed statement.
Fears the U.S. economy could be heading for another recession have ebbed in recent months as growth accelerated in the third quarter after a weak first-half performance.
Stubbornly high unemployment remains a major challenge, however, for a recovery that is fragile.
Wall Street stock indexes held gains following the statement, while the dollar trimmed losses against the euro and Treasuries prices slightly extended declines.
Analysts will get more clarity on the Fed's outlook for the economy when it releases quarterly economic forecasts at 2 p.m. EDT (1800 GMT), followed shortly after by a news conference with Fed Chairman Ben Bernanke.
The ADP figures came ahead of the government's much more comprehensive labour market report on Friday, which includes both public and private sector employment.
That report is expected to show a rise in overall nonfarm payrolls of 95,000 last month, based on a Reuters poll of analysts, and a rise in private payrolls of 120,000. The unemployment rate is seen holding steady at 9.1 percent.
Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome. Analysts said the release would not likely prompt major readjustments to Friday's forecasts.
It portrays a job market that's improved a bit since earlier in the summer. But we're still not generating the kind of job growth that's going to be enough to bring down the unemployment rate quickly, said David Resler, chief economist at Nomura Securities in New York.
Private sector job gains came from small and medium-size businesses, which added 58,000 and 53,000 jobs, respectively. Large businesses shed 1,000 positions. The report is jointly developed with Macroeconomic Advisers LLC.
Earlier on Wednesday a separate report showed the number of planned layoffs at U.S. firms dropped in October after hitting a more than 2-year high the month before, while seasonal positions pushed hiring plans sharply higher.
Employers announced 42,759 planned job cuts last month, tumbling 63.1 percent from 115,730 the month before, according to the report from consultants Challenger, Gray & Christmas, Inc. It was the lowest level in four months.
Hiring plans surged to 159,177 jobs last month from 76,551 in September as companies announced seasonal positions. Retail jobs led the way with 133,940 openings.
In housing data, applications for U.S. home mortgages were little changed last week as purchase demand improved but refinancing activity stagnated, an industry group said.
The Mortgage Bankers Association's seasonally adjusted gauge of loan requests for home purchases rose 1.8 percent, while the index of refinancing applications was off 0.2 percent. The overall index of mortgage application activity edged up 0.2 percent.
(Editing by Padraic Cassidy)