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Job picture gets a little bit brighter

By Jessica Dickler and Hibah Yousuf, CNNMoney.com staff writers


NEW YORK (CNNMoney.com) -- In some welcome news on the job front, the pace of U.S. job losses eased in December, according to two reports released Wednesday.

Automatic Data Processing (ADP, Fortune 500), a payroll-processing firm, said private-sector employers cut 84,000 jobs in December, the fewest since March 2008.

It was the ninth straight month that job losses narrowed from the previous month. The number of cuts in November was revised down to 145,000 from the previously reported 169,000.

Economists surveyed by Briefing.com had forecast a loss of 75,000 jobs in December.

"We're moving in the right direction, and I think we're only a month or two away from reporting a positive top line number," said Joel Prakken, chairman of Macroeconomic Advisers, in a conference call.

The service sector reported job growth for the first time in 21 months, with an increase of 12,000 jobs in December, though Prakken said the uptick could be because of an expansion in temporary employment.

The figure was offset by a loss of 96,000 in the goods-producing sector and a drop of 43,000 manufacturing jobs.

"We're still a little ways away from seeing an upturn in employment at the country's plants and on construction sites," Prakken said.

He added that he expects the jobless rate to edge higher to about 10.25% during the first quarter of this year and linger for the next two years, hovering above 9% by the end of 2010 and higher than 8% at the end of 2011.

In a separate report, outplacement firm Challenger, Gray & Christmas Inc. said that 45,094 job cuts were announced in December, 10% less than November's 50,349 cuts. It was the lowest total since December 2007, when 44,416 cuts were announced.

Despite the recent decline, 2009 was still the heaviest downsizing year since 2002, with employers announcing 1,288,030 planned job cuts for the year, according to Challenger.

The automotive sector was hit the hardest this year, with 174,192 job cuts, followed by the government and non-profit sector, Challenger said. However, in both cases, job losses in the first half of the year were significantly greater than the second half, indicating that job losses may have bottomed out.

"It definitely was a bi-polar year when it came to downsizing," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. "In the first half of 2009, the economy was reeling from the ongoing housing market collapse, bank failures and the further deterioration of the country's manufacturing base; the automotive industry in particular. Somewhere in the second or third quarter, we turned a corner and, now, as we begin 2010, there are promising signs of continued improvement," he said.

But it could still be a while before the job market improves, Challenger noted, as employers are likely to be reluctant to start hiring again.

The report sets the stage for the highly anticipated monthly jobs report from the government due Friday. The Labor Department report is expected to show that no jobs were gained or lost in December, an improvement from the 11,000 loss reported for November, according to a consensus estimate of economists compiled by Briefing.com. The unemployment rate is predicted to edge up to 10.1%. To top of page

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