Economy takes toll on jobs

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NEW YORK (CNNMoney.com) -- For American workers buffeted by layoffs and cutbacks, January was as bad as it felt, as indicated by key employment reports released Wednesday.

The number of planned cuts announced in the month rose to the highest level in seven years, according to outplacement firm Challenger, Gray & Christmas Inc. And ADP's National Employment Report found that private-sector employers cut 522,000 positions.

Job cut announcements by U.S. employers soared to 241,749 in January, up 45% from December's 166,348 cuts, according to Challenger. That was the highest number of job cuts since January 2002.

Layoffs rose 222% - more than triple - from January 2008, when 74,986 job cuts were announced.

On the heels of the worst holiday season in decades, the retail sector was hit the hardest. Boosted in a large part by Circuit City, 53,968 job cuts were announced.

Following retail, the industrial goods industry cut 32,083 jobs last month, while the computer, pharmaceutical and aerospace industries also notched large losses.

"The variety of industries represented among the top five job-cutting sectors in January is further evidence of how far the impact of this recession has spread. Industries that at first appeared to be immune to downturns, such as computer and pharmaceutical, are now rapidly shedding workers," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

"If there is any bright spot in the latest job-cut data, it is the fact that financial firms announced only 1,458 job cuts in January. That is the lowest one-month total for that industry since 2005," said Challenger.

Of the 23 industry categories that the Challenger report tracks, 16 reported higher job cuts in January compared to the previous month. Eleven industries announced hiring plans, led by government, computer and entertainment.

The ADP report, which is calculated based on payroll data, reported that the private sector shed 522,000 jobs on a seasonally adjusted basis in January. That was less than the 659,000 private-sector jobs lost in December, according to the payroll-processing company.

"What is striking this month was the depth and breadth of these declines," said ADP spokesman Joel Prakken in a conference call with reporters. Employment in the service sector declined by 279,000 positions, according to the report. The goods-producing sector lost 243,000 jobs and employment in the manufacturing sector fell by 160,000 jobs.

Smaller and medium-sized businesses were hit harder than big companies, according to the report. Smaller businesses, those companies with fewer than 50 employees, lost 175,000 jobs in January. Medium-sized businesses, companies with between 50 and 499 employees, lost 255,000 employees. Larger businesses, with 500 or more employees, shed 92,000 jobs.

Separately, TrimTabs Investment Research said Wednesday that the U.S. economy lost 650,000 jobs in January after shedding 683,000 jobs in December.

TrimTabs, which uses daily income tax withholdings into the U.S. Treasury to estimate changes in employment, said withholdings fell 4.9% year-over-year.

The reports set a dour tone for the government's monthly jobs report due Friday.

The Labor Department report is expected to show a loss of 500,000 jobs in January, down from the 524,000 reported for December, according to a consensus estimate of economists complied by Briefing.com. The unemployment rate is forecasted to rise to 7.5% from 7.2%.

Going forward, "joblessness is going to continue for at least another six to seven months," according to Rich Yamarone, director of economic research at Argus Research.

"You're going to see losses anywhere from 300,000 to 600,000 or 700,000. There are so many businesses on the verge of insolvency, there's just not a need for workers," he said.