Job market shows signs of improvement
Reports show narrower decline in private-sector job losses and slight drop in announced job cuts.
NEW YORK (CNNMoney.com) -- The pace of U.S. job losses -- while still fairly strong -- may be abating, according to a couple of reports released Wednesday.
Automatic Data Processing, a payroll-processing firm, said private-sector employers cut 532,000 jobs in May, a 2.4% improvement from the revised 545,000 drop in April.
Economists surveyed by Briefing.com expected a more modest loss of 525,000 jobs last month. ADP originally reported a loss of 491,000 private-sector jobs in April.
ADP said that despite recent signs of a burgeoning recovery, employers will likely continue to cut jobs for the next couple of months, but not as quickly as in the past six months.
"It's quite likely that employment has another million or million and a quarter to fall," said Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC.
Large businesses, those with 500 or more workers, shed 100,000 jobs. Medium-sized businesses, with between 50 and 499 workers, chopped 223,000 workers. And small-businesses, those with less than 50 workers, shed 209,000 jobs.
The manufacturing and financial sectors were hard hit last month, according to the report. In its 39th consecutive monthly decline, the manufacturing sector lost 149,000 jobs. The financial sector lost 32,000 jobs in its 18th consecutive monthly decline.
"This was a weak report with the weakness widespread," Prakken said. However, "maybe we're starting to see some moderation in these job losses."
"The free fall in the economy is likely over," he said.
The report is based on anonymous payroll data that represents 400,000 of ADP's 500,000 domestic business clients and about 24 million employees across a broad range of industries.
Separately, outplacement firm Challenger, Gray & Christmas Inc. reported that the number of job cuts announced in May fell for the fourth straight month.
Challenger said job cut announcements by U.S. employers totaled 111,182 in May, an improvement of 16% from April's 132,590 cuts. It was the lowest total since last September, according to Challenger, but the May figure was still 7.4% higher than job cuts announced in the same month a year ago.
As states struggle with rising deficits, the government/non-profit sector was hit the hardest for the third month in a row, Challenger said, with 22,317 announced job cuts in May. The computer sector had the second highest tally of planned cuts, followed by the chemical and automotive industries.
While job cut totals have steadily fallen since January, growing unemployment is still a major concern.
"This decline in job cuts could be short-lived," John Challenger, chief executive officer of Challenger, Gray & Christmas said in a statement.
"The second quarter is typically the lowest quarter of the year when it comes to job cuts. Corporate downsizing may continue to remain slow during the summer months, but if the past is any indication, we could see the pace accelerate again in the latter half of the third quarter through the end of the year," he said.
Employers have announced 822,282 job cuts so far this year. That is more than double the 394,193 job cuts announced through this point of 2008, Challenger said.
The reports pave the way for the government's monthly jobs report due Friday. The Labor Department report is expected to show that the economy shed 550,000 jobs in May, slightly more than the 539,000 reported for April, according to a consensus estimate of economists complied by Briefing.com. The unemployment rate is predicted to rise to 9.2% from 8.9%.