US private sector sheds 473,000 jobs - ADP says job losses to continue

US private sector sheds 473,000 jobs - ADP says job losses to continue
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: July 1 2009 14:00 | Last updated: July 1 2009 14:00
http://www.ft.com/cms/s/0/efa04eda-6632-11de-a034-00144feabdc0.html


US companies cut nearly a half million jobs last month as the recession continued to cut into the labour market in spite of other recent signs of hope in the economy.

Private companies cut 473,000 jobs from their payrolls in June, according to a survey by ADP employer services on Wednesday. The figure was slightly lower than the revised 485,000 jobs slashed in May, but was worse than economists expected and raised fears that the unemployment rate would continue to climb.

Although the monthly figure remains grim it was the lowest total since last October and marks an improvement from the more severe job losses earlier in the year. ADP noted that monthly job losses in the second quarter averaged 492,000, down from 691,000 in the first quarter.

Employment in the goods-producing sector was hit the hardest, where 250,000 jobs were shed. Manufacturers, which have shed workers for 40 months in a row, culled 146,000 jobs in June, and construction employment fell by 97,000 as builders continue to cut back. In the services sector 223,00 jobs were lost.

Last month medium-sized businesses suffered the most job cuts, followed by small businesses and large companies.

“Despite some recent indications that economic activity is stabilising, employment, which usually trails overall economic activity, is likely to decline for at least several more months,” ADP said in its report.

Some analysts took hope from a separate report from Challenger, Gray & Christmas, an outplacement consultancy, which showed that announced lay-offs declined in June for the fifth straight month and were down 9 per cent compared with the same month a year ago. However, persistent high levels of jobless claims and Tuesday’s Conference Board report showing a drop in consumer confidence continue to darken optimism for a fast recovery.

Wednesday’s reports sets the stage for Thursday’s labour department non-farm payroll figures. Economists expect that the US shed another 363,000 workers in June, pushing the unemployment rate to 9.6 per cent.

Wall Street initially took confidence from the Challenger report but futures lost some of their shine after the release of the ADP figures.