US private sector job losses bode ill for recovery – Yahoo! News

by ray

Last month, more than the 350,000 expected by most analysts, in a report foreshadowing Friday's official unemployment data.

The ADP National Employment Report showed the decline nevertheless was less steep than in June, when a revised 463,000 jobs were cut.

The July decline in non-farm payrolls was the smallest since October 2008 and extends “the notable improvement” between the first and second quarters of 2009, the firm said.

However, ADP warned, “despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least several more months, albeit at a diminishing rate.”

The monthly ADP report provides a snapshot on the labor market ahead of the official data which covers the public and private sectors.

The Labor Department is to publish jobs data for July Friday. Most analysts expect the unemployment rate climbed to 9.6 percent from 9.5 percent in June, a 26-year high, amid a brutal recession that began in December 2007.

They also anticipate the economy shed 328,000 non-farm jobs.

The ADP report of a bigger-than-expected fall in private sector jobs was “adding some uneasiness among (equity) traders ahead of Friday's labor report,” said Charles Schwab & Co. analysts in a client note.

Ian Shepherdson of High Frequency Economics said that the ADP slowdown in nonfarm job losses reflected a sharp drop in initial jobless insurance claims due to an unusually smaller number of temporary auto sector retooling layoffs.

“There's no question the peak rate of decline has passed, though these are still horrific numbers by all but the most recent standards,” Shepherdson said.

A separate private report Wednesday showed the huge services sector contracted unexpectedly in July after moving closer to growth in the prior three months.

The Institute of Supply Management (ISM) said its index of the non-manufacturing sector fell to 46.4 percent in July from 47.0 percent in June, the 10th consecutive monthly decline.

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