Job cuts ease in August
Report says private sector jobs fell at the smallest monthly rate since September; separate survey says summer layoffs slow.
NEW YORK (CNNMoney.com) -- The pace of U.S. job losses has slowed, but we're not out of the woods yet, according to two reports released Wednesday.
Automatic Data Processing, a payroll-processing firm, said private-sector employers cut 298,000 jobs in August. It was the smallest monthly total since last September 2008.
The August job cut total was more than expected. Economists surveyed by Briefing.com had forecast a loss of 255,000 jobs last month.
However, August's employment decline was an improvement from the month before. ADP originally reported a loss of 371,000 private-sector jobs in July. The July tally was then revised to 360,000.
"There's a gradual improvement in labor markets underway in the sense that the monthly losses are diminishing," said aid Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC.
"The disappointing news is that we have several more months to go of job losses," he added.
Large businesses, those with 500 or more workers, shed 60,000 jobs. Medium-sized businesses, with between 50 and 499 workers, chopped 116,000 workers. And small businesses, those with less than 50 workers, shed 122,000 jobs. Since reaching peak employment in January 2008, small-sized businesses have shed nearly 2.5 million jobs.
The goods-producing sector cut 152,000 jobs in August, the service sector shed 146,000 jobs and the manufacturing sector dropped 74,000, which was the smallest monthly decline since July 2008.
The ADP report is based on payroll data from about 500,000 employers across a broad range of industries.
Separately, outplacement firm Challenger, Gray & Christmas Inc. reported that 76,456 jobs were cut in August, 21% fewer than in July. It was the lowest total since June, when 74,393 layoffs were announced.
Though that's encouraging, a possible jobs recovery depends on what happens in the next few months, Challenger said.
"The next four months will be very telling about the state of the job market. The final four months of the year are typically among the heaviest for downsizing," Challenger said.
Going forward, "if monthly job-cut levels remain near 100,000 or lower, it will be a strong indication that the economy and job market are improving," said John Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement.
The government/non-profit sector was hit the hardest in August, with 38,586 announced job cuts, led by layoffs at the United States Postal Service. The automotive sector was second-worst, with 6,694 planned cuts.
Altogether, employers have announced 1,070,504 job cuts so far this year -- 60% more than at this point a year ago. The current tally is less than 200,000 away from surpassing the total number of job cuts in all of 2008, which was 1,223,993.
The reports set the stage for the highly anticipated monthly jobs report from the government due Friday. The Labor Department report is expected to show that the economy shed 265,000 jobs in August, slightly more than the 247,000 reported for July, according to a consensus estimate of economists compiled by Briefing.com. The unemployment rate is predicted to rise to 9.5% from 9.4%.
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