INSTANT VIEW: Private payrolls fall more than expected

NEW YORK (Reuters) - U.S. private employers shed 371,000 jobs in July, compared with a revised 463,000 drop in June, a report by a private employment service said on Wednesday.

KEY POINTS: * Reuters consensus forecast for July ADP private-sector payroll change was for loss of 345,000 jobs * US ADP June payroll change revised to loss of 463,000 from loss of 473,000 * US ADP July payrolls drop was smallest since October 2008

(-352,000)

COMMENTS:

WILLIAM O'DONNELL, HEAD TREASURY STRATEGIST, RBS

SECURITIES, STAMFORD, CONNECTICUT:

"The July jobs decline was the smallest since October 2008. On the one hand it was slightly weaker than expectations, but still well within the range. If anything, it has just solidified the bubbling notion that the job market is seeing a slow improvement."

DAVID DIETZE, CHIEF INVESTMENT STRATEGIST, POINT VIEW

FINANCIAL SERVICES, SUMMIT, NEW JERSEY:

"It came in worse than expected, and it does foreshadow what is going to be arguably the biggest data point in the month, which is Friday's unemployment report. The ADP number coming in inferior relative to expectations would suggest that unemployment is going to come in worse than expected."

JOE MANIMBO, CURRENCY TRADER, TRAVELEX GLOBAL BUSINESS

PAYMENTS, WASHINGTON:

"The ADP payrolls report and the Challenger layoffs data weighed on risk appetite and consequently revived some demand for safe-haven currencies. It does suggest that we could see a downside surprise to Friday's broader employment data."

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH,

CONNECTICUT:

"Again we are seeing improvement in many of the gauges in the economy and today's ADP data is a bit weaker than expected but it's not off by a considerable margin. I don't think this changes people's expectations that we are still likely to be turning a corner this quarter in the economy. The unemployment levels are likely to continue to lag the economy as historically that typically is the case. So it tends not to be a leading indicator and kind of follows the economy. Again it's only slightly weaker than expected, so for stock prices, it's not likely to derail the gains we've seen."

LOU BRIEN, MARKET STRATEGIST, DRW TRADING GROUP, CHICAGO:

"ADP does a good job, but on a month to month basis they are not necessarily overly accurate. Over the year, when they have a chance to review, they tend to be a better read. The market certainly has reacted, as the Treasuries have come off of their lows that they were just setting before the number came out. This, coupled with the Challenger report that showed an increase from June in the number of layoff announcements is getting people to think that the number might be worse than previously expected."

DAN GREENHAUS, ANALYST, MILLER TABAK & CO, NEW YORK:

"It is of course worse than expected, but the number is well off its highs, indicating modest improvement in the labor market. I think the initial market reaction to this will be negative, but the relationship between the ADP number and the payroll number is suspect at best."

MARKET REACTION: STOCKS: S&P 500 stock index futures turn negative BONDS: U.S. Treasury debt prices pare losses DOLLAR: U.S. dollar falls versus yen