Private-Sector Hiring Falters; Planned Layoffs Up 7%

Private-sector job growth tumbled by 39,000 from August to September, a considerably worse number than analysts had expected and indicative that the employment market is far from recovery, according to ADP.

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The ADP National Employment report, compiled with Marcoeconomic Advisors, was projected to show a gain of 20,000 for the month.

"It's a disappointing number but it's not unexpected," Joel Prakken, chairman of Macroeconomic Advisors, told CNBC. "GDP growth has slowed to below the growth rate of productivity and it's inevitable that you'd have this deceleration in jobs."

Stock index futures surrendered earlier gains after the report and were indicating a flat open for Wall Street.

The goods-producing sector suffered the most, with 45,000 jobs lost and manufacturing lost 17,000, while medium-sized businesses lost 14,000 and large businesses dropped 11,000. The service sector provided the only growth, with a gain of 6,000.

"The phase of the recovery that usually includes employment starting to move up following an inventory cycle has just not kicked in yet in this recovery," Prakken said.

The projected loss from the ADP survey could lead economists to refine their projections for Friday's monthly nonfarm jobs report from the Labor Department. Consensus is looking for flat growth overall but with an increase of about 75,000 in the private sector that will be offset by a loss in government jobs.

The weak report coupled with a reading showing that planned job cuts rose slightly in September, remaining near the lowest pace of the year, according to outplacement consulting company Challenger, Gray & Christmas.

Employers planned to lay off 37,151 workers in September, up 7 percent from the 34,768 planned job cuts in August, a low for 2010.

For the year, employers have announced 411,272 job cuts, 64 percent lower than the 1,136,908 cuts planned for the same period in 2009.

"The low job-cut numbers we are seeing in almost every sector do not necessarily translate into increased hiring," John A. Challenger, CEO of Challenger, Gray & Christmas, said in a press release. "There is hiring going on in the economy, but it is not enough make a discernable dent in the number of unemployed."

"Government employers, at the national, state and local levels, are typically big contributors to job creation, not only through their own hiring, but also by purchasing goods and services from the private sector. Unfortunately, this massive part of the economic engine simply is not firing on all pistons."