Job Losses Less Than Thought; Planned Layoffs Gain

Private-sector jobs fell by 22,000 in January, the smallest loss since employment began dropping in 2008 and even better than expectations, according to the ADP National Employment Report.


ADP officials said the report was consistent with the firm's expectations that employment numbers will turn positive in February.

Stock index futures briefly pared losses on the news.

The January numbers showed nonfarm private employment in the service sector actually increased by 38,000, but was not enough to offset losses elsewhere, said Macroeconomics Advisers President Joel Prakken.

Large businesses lost 19,000 workers in the month while small businesses fell 12,000, ADP said. Medium-sized businesses, defined as those with 50 to 499 workers, saw gains of 9,000.

The ADP report is used as a setup data point for the monthly nonfarm payroll report issued by the Labor Department on Friday.

ADP unemployment numbers have on average been 94,000 higher than the government's report, which some analysts think could represent positive job growth for January due to the government's hiring of census workers.

In a separate report, US employers announced last month they planned to lay off 71,482 workers, the first time since July last year that planned job cuts rose, a report by consultancy firm Challenger, Gray & Christmas showed Wednesday.

The figure represents the largest monthly total since August 2009, when 76,456 layoffs were announced, and it is a 59 percent increase from December, when announced layoffs fell to a two-year low of 45,094.

"The increase in January is not necessarily a sign of a recession relapse. It is not uncommon to see a surge in job-cut announcements to begin the year," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

Heavy cuts in the retail and telecommunications sectors were to blame for the surge, as well as downsizing in the pharmaceutical sector, the report showed.

The retail sector planned to cut 16,737 jobs, 14,010 jobs were to be cut in the telecom sector, while the number of pharmaceutical jobs to go was 8,170 in January.

"The beginning of the year is particularly rough on retail workers, as these employers enter one of the slower sales periods of the year," Challenger said.

The government and non-profit sector, as well as the automotive sector, also contributed to the job cuts figure.

But 2010 is starting on a better footing than last year, when planned layoffs were 241,749, the report said.

"The fact that January job cuts did not exceed 100,000 bodes well for much lighter downsizing this year," Challenger said. "Of course, any major shock to the economy could set off a surge in job cuts but, at the moment, conditions appear to have stabilized."

Human resources professionals are likely to focus on retaining workers rather than firing them this year, he added.

"As the economy improves, it will become more difficult to keep workers from seeking greener pastures," Challenger said, explaining that companies that have enacted salary freezes to prevent job cuts may see these measures taking a toll on employee morale.