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INSTANT VIEW: U.S. private sector job losses rise in March

NEW YORK (Reuters) - U.S. private sector job losses accelerated in March, more than economists’ expectations, according to a report by ADP Employer Services on Wednesday.

KEY POINTS: * ADP said private employers cut 742,000 jobs in March versus a 706,000 revised cut in February that was originally reported at 697,000 jobs. * Economists had expected 655,000 private-sector job cuts in March, according to a recent Reuters poll.

COMMENTS:

IAN SHEPHERDSON, CHIEF U.S. ECONOMIST, HIGH FREQUENCY ECONOMICS, VALHALLA, NEW YORK:

“This is very disappointing but not a huge surprise. We wondered if the inflection in some of the recent data -- retail sales, IP, durable goods, home sales -- might be enough to slow the rate of job loss for a time, but it has not. Companies will need to see stronger evidence of a sustained slowing in the rate of contraction in demand before the drop in payrolls will slow. In March, the job losses were spread across all sectors and all size of employers, but the rate of deterioration is faster for smaller companies and the services sector. We have revised down our estimate for Friday’s official payroll number to -750K from -700K.”

SAMARJIT SHANKAR, DIRECTOR OF GLOBAL STRATEGY, BANK OF NEW YORK MELLON, BOSTON:

“The ADP report was much worse than expected. It does suggest that the labor market remains very fragile and that the outlook is dismal. This also means that we could have a very bad number on Friday and continuing job losses and higher unemployment going forward. The impact on the dollar though is muted. At the end of the day, it is a combination of the reliability of the number and also the fact that the bad news on the labor market has already been priced in.”

ANDREW BRENNER, SENIOR VICE PRESIDENT, MF GLOBAL, NEW YORK:

“ADP points to an awful employment number Friday.”

MATT ESTEVE, FOREIGN EXCHANGE TRADER, TEMPUS CONSULTING, WASHINGTON:

“It’s a terrible number. It is almost a loss of three quarters of a million jobs which is possibly the highest we have seen so far over the length of this crisis. Obviously (it is) foreboding ahead of (Friday’s) non-farm payrolls report. The dollar will benefit from this. Risk aversion has come back into play over the past few days, specifically ahead of the G20 summit. So traders have been unwilling to take any substantial positions either way. That is why we have seen the dollar bound to ranges, but with the stock market pointed to a negative open on Wall Street, continued negative sentiment in the labor market will ultimately boost the dollar.”

JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY:

“Not good. This continues to drag on and get worse, and I think this is a prelude to Friday’s bigger unemployment number.

“Unemployment is something that has been on back burner, as people worry about General Motors and General Electric, but it going toward double digits, and that is going to put a crimp into any plans the government has. You’re seeing the market react to that now.”

NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT, LEXINGTON, MASSACHUSETTS

“The ADP number has got a bit of a checkered history. The methodology keeps changing in order to try to make it match up more closely with the actual numbers.

“I was expecting payroll declines of 750,000 this month, based on what’s been happening to unemployment insurance claims. So ADP coming in at 742, which is an estimate for the private sector only, would clearly be consistent with the 750.

“I would have to say that 750 that was ball-low consensus, most people were not expecting quite that bad. We may see the consensus move down after this ADP number.”

JESSICA HOVERSEN, FIXED INCOME AND CURRENCY ANALYST, MF GLOBAL LTD., CHICAGO:

“That’s a really bad number and set the market up for another bad reading on non-farm payrolls on Friday. The correlation between ADP and the government reports has increased since December. Still, there’s a lot going on with ECB and G20 meetings taking place with the possibility of the ECB announcing it will buy corporate bonds. That is enough to keep a lid on dollar and the euro for now.”

MARKET REACTION: STOCKS: U.S. equity index futures extend losses BONDS: U.S. Treasury debt prices erase losses DOLLAR: U.S. dollar falls versus yen

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