ADP Shows Record Job Losses; Planned Layoffs Down

Private sector job losses accelerated in February, according to a report by ADP Employer Services that suggests hefty employment declines are on the way in the government's payrolls report due on Friday.

Meanwhile, a separate survey on planned layoffs showed a slower pace for job cuts in February than in January.

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ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January.

The January job cuts were originally reported at 522,000.

It was the biggest job loss since the report's launch in 2001 and showed the misery of declining employment spreading broadly and evenly throughout the economy.

The service sector, which often resists the grip of recession longer than other areas, accounted for more than half of the total losses, reflecting the rapid deterioration of the economy in recent months.

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"None really escaped the sword here," Joel Prakken, chairman of Macroeconomic Advisers, whose firm jointly developed the ADP report, said about the service sector.

Economists had expected 610,000 private-sector job cuts in February, according to the median of 23 forecasts in a Reuters poll.

The forecasts in the poll ranged widely from a drop of 730,000 to losses of 500,000.

Still, on Wall Street, stock futures held onto earlier gains. Government bonds, which generally benefit from weak economic data, extended their losses.

"I was actually expecting it to be a little worse. Every month we've had data come in worse than expected," said Dan Faretta, senior market strategist at Lind-Waldock in Chicago. "Until we get positive news about housing or industry or anything like that, the numbers will continue to get worse. The numbers keep weighing on all the markets."

Layoffs Fell 23% in February

Separately, planned layoffs at U.S. firms fell 23 percent in February from January's seven-year peak, but remained well above long term averages as the protracted U.S. recession took a heavy toll on employment, a report showed on Wednesday.

Employers announced plans to cut 186,350 jobs in February, led by the auto industry, down from 241,749 in January, amid an economic slump that is on track to be the most protracted since World War Two, outplacement company Challenger, Gray & Christmas said on Wednesday in its monthly report.

"The decline in job cuts last month offers some hope that January was the peak and we will now see layoffs begin to fall or at least stabilize," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement.

But he said monthly job cuts may remain above 100,000 in the first half of the year and possibly for the rest of 2009.

Job cuts could continue to be particularly heavy in the automotive, manufacturing and financial sectors, he added.

February layoffs were led by the automotive sector, which announced 61,288 planned cuts, or about one-third of the monthly total. The next biggest sectors were industrial goods industries with 19,462, retail with 18,759, and financial with 13,550.

The Challenger data comes ahead of the government's closely watched non-farm payrolls report on Friday, which is expected to show 648,000 jobs were lost in February and the unemployment rate rose to 7.9 percent from 7.6 percent.

The jobless rate is likely to push well above 8 percent by mid-2010 and may even top 9 percent, Prakken said.

Prakken added that the unemployment rate would top 10 percent without the government's economic stimulus plan.

Prakken also told a teleconference of journalists that he expected the economy to lose 3 million jobs this year even with the stimulus plan in place. He said he expected the economy's contraction in the first quarter to be similar to the drop in gross domestic product seen in the fourth quarter, when the economy shrank at its fastest annual rate since 1982.

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