ADP Shows Slowest Hiring in 4 Years; Layoffs Surge
Two surveys out Wednesday painted a lackluster picture of the employment market ahead of the government's monthly jobs report, which is due out on Friday.
U.S. private employers likely added 38,000 jobs in August, a report by a private employment service said on Wednesday. The result was down from the 48,000 jobs reported one month ago for July by ADP, whose employment report was jointly developed with Macroeconomic Advisers.
Economists polled by Reuters had forecast a result of 83,000 for August.
The ADP result comes after a separate survey showed planned U.S. lay-offs rocketed in August as the housing slowdown and subprime mortgage debacle led to record job cuts in the financial sector.
Announced lay-offs surged 85 percent to 79,459 in August from 42,897 in July, according to Challenger, Gray & Christmas, an employment consulting firm. August's job cuts were the highest since February, when they totaled 84,014.
"Nearly half of the August cuts came from the financial sector, as dozens of mortgage and subprime lenders caved under the pressure of a sinking housing market,'' Challenger, Gray & Christmas said in a statement.
Financial job cuts totaled 35,752 in August, the highest monthly total for the industry since Challenger, Gray & Christmas began tracking in 1993, the firm said.
August's job cuts rose 22 percent from the previous August, when 65,278 cuts were announced.
Rapidly rising defaults on mortgages made to riskier borrowers prompted credit markets around the world to seize up in late July and into August. That essentially severed the credit lines to a number of mortgage finance companies, cutting off their ability to fund loans made to U.S. homebuyers.
One of the most spectacular collapses occurred when Melville, New York-based American Home Mortgage Investment, which had been the No. 10 U.S. mortgage lender, filed for bankruptcy in early August and fired nearly all of its work force.