U.S. private sector cuts 697,000 jobs in February
NEW YORK (Reuters) - U.S. 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.
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.
"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."
Economists expect Friday's payrolls report, which gives a more comprehensive picture of the labor market, to show the economy shed 648,000 jobs in February and the unemployment rate rose to 7.9 percent from 7.6 percent.
The U.S. 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 U.S. 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.
(Additional Reporting by Deepa Seetharaman; Editing by Tom Hals)
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