US private sector job growth jumps to 298,000 in February, banks leap

US private sector job creation raced ahead in February, according to a widely followed gauge, sending shares bounding higher on both sides of the Atlantic.

Private firms in America took on 298,000 more workers last month, according to payrolls consulting firm ADP.

That was far in excess of the 190,000 print which economists had been anticipating.

Government data on non-farm payrolls due out two days later was expected to show 200,000 more hires for February.

To take into account, the ADP data was meant to provide a lead indicator of the monthly 'official' jobs figure, but from one month to the next sometimes wide disparities were not uncommon.

"The ADP number is based on a model which incorporates lagged official employment data, macroeconomic variables and information taken from firms which use ADP for payroll processing, and it is not a consistently reliable guide to the official number. But it is of some value, and in the wake of this report we are moving up our forecast for Friday's number to 250K from 200K," said Ian Shepherdson, chief US economist at Pantheon Macroeconomics.

Following Wednesday's report, the yield on the benchmark 10-year US Treasury note was up by five basis points to 2.56%.

The largest increases were concentrated among small and mid-sized firms, which added 104,000 and 122,000 payrolls, respectively.

Service-producing companies took on 193,000 workers, with professional and business hiring strongest at 66,000, followed by Education&Health and Leisure&Hospitality with 40,000 each.

ADP's tally for private sector job growth in January was revised higher from 246,000 to 261,000.

Banks jump

Wednesday's US job news proved to be another godsend for investors in bank shares on both sides of the Pond, as yields on government bonds jumped, providing a potential boost for lenders' net interest margins.

In London, shares in Barclays and Lloyds paced gains in the space, while in the US the benchmark KBW index of bank shares was adding 1.55% as of 1454 GMT.

The yield on benchmark two-year debt issued by HM Treasury was flat at 0.10% as that on 10-year debt rose three basis points to 1.23%.