NEW YORK—Private sector job cuts from last month exceeded projections, according to a latest ADP survey, signaling that U.S. businesses have continued doubts about the health of the nation’s economy.
ADP is one of the largest HR/payroll outsourcing firms in the United States and releases monthly payroll estimates. The survey showed 298,000 estimated layoffs during August. The federal government’s report is due out on Friday.
Nonetheless, last month’s estimated drop of 298,000 jobs is small compared to the layoffs seen during the thick of the recession. Job losses averaged 700,000 people per month during the first quarter of 2009.
Analysts estimate that true U.S. job losses may be smaller since the ADP figures do not include government payrolls, which were projected to increase last month, as state and federal agencies implement President Barack Obama’s spending policies.
But the larger implications of job losses may yet be felt. Seventy percent of the U.S. economy is driven by consumer spending, which is closely tied to employment figures—or consumers’ ability to pay bills and make discretionary purchases. With the 2009 holiday shopping season around the corner, retailers and the service sector are depending on consumers to open their pocketbooks.
The August ADP report showed that small businesses contributed to most of the losses with 122,000 job cuts, followed by medium-sized businesses with 116,000 cuts. Layoffs were split evenly among service and goods-producing industries.
“Employment losses are clearly diminishing. Despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is still likely to decline for at least several more months, albeit at a diminishing rate,” said Joel Prakken, Chairman of Macroeconomic Advisers LLC, in the ADP report.
“Since reaching peak employment in January 2008, small-size businesses have shed 2.5 million jobs,” said Prakken.
Job losses have also increased U.S. productivity. The Labor Department, on Wednesday, said that last quarter non-farm sectors are experiencing their highest productivity figures in six years.
The results come from businesses cutting workers to squeeze more production from smaller cost base. Productivity across all industrial sectors rose 6.6 percent annually during the last quarter.
The Labor Department indicated that while payrolls shrank 1.5 percent, non-farm hours worked among businesses declined 7.6 percent.
Earlier in the week, the Institute of Supply Management (ISM) said its August manufacturers’ index rose for the first time in 18 months, while the overall economy grew for the fourth consecutive month.
“The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July,” said ISM President, Norbert J. Ore, in a statement. “While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth.”
The ISM report indicated that some of the manufacturing demand stemmed from the federal “Cash for Clunkers” program, as automobile production ramped up over the last month.
ADP is one of the largest HR/payroll outsourcing firms in the United States and releases monthly payroll estimates. The survey showed 298,000 estimated layoffs during August. The federal government’s report is due out on Friday.
Nonetheless, last month’s estimated drop of 298,000 jobs is small compared to the layoffs seen during the thick of the recession. Job losses averaged 700,000 people per month during the first quarter of 2009.
Analysts estimate that true U.S. job losses may be smaller since the ADP figures do not include government payrolls, which were projected to increase last month, as state and federal agencies implement President Barack Obama’s spending policies.
But the larger implications of job losses may yet be felt. Seventy percent of the U.S. economy is driven by consumer spending, which is closely tied to employment figures—or consumers’ ability to pay bills and make discretionary purchases. With the 2009 holiday shopping season around the corner, retailers and the service sector are depending on consumers to open their pocketbooks.
The August ADP report showed that small businesses contributed to most of the losses with 122,000 job cuts, followed by medium-sized businesses with 116,000 cuts. Layoffs were split evenly among service and goods-producing industries.
“Employment losses are clearly diminishing. Despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is still likely to decline for at least several more months, albeit at a diminishing rate,” said Joel Prakken, Chairman of Macroeconomic Advisers LLC, in the ADP report.
“Since reaching peak employment in January 2008, small-size businesses have shed 2.5 million jobs,” said Prakken.
Highest Productivity in Six Years
Job losses have also increased U.S. productivity. The Labor Department, on Wednesday, said that last quarter non-farm sectors are experiencing their highest productivity figures in six years.
The results come from businesses cutting workers to squeeze more production from smaller cost base. Productivity across all industrial sectors rose 6.6 percent annually during the last quarter.
The Labor Department indicated that while payrolls shrank 1.5 percent, non-farm hours worked among businesses declined 7.6 percent.
Earlier in the week, the Institute of Supply Management (ISM) said its August manufacturers’ index rose for the first time in 18 months, while the overall economy grew for the fourth consecutive month.
“The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July,” said ISM President, Norbert J. Ore, in a statement. “While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth.”
The ISM report indicated that some of the manufacturing demand stemmed from the federal “Cash for Clunkers” program, as automobile production ramped up over the last month.
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