Reports indicate job cuts lessening as economy brightens
August's decline was the smallest since September a year ago, and recent indications are that overall economic activity is stabilizing, the report said. But as employment usually trails overall economic activity, ADP also expects it is still likely to decline for at least several more months, though at a diminishing rate.
According to the report, the economy also shed slightly fewer jobs in July than originally thought. ADP revised July's job losses to 360,000 from the previously reported 371,000.
Employers with 500 or more workers cut 60,000 jobs last month, while mid-sized companies, those with 50 to 499 employees, dropped 116,000. Employment among small-size businesses, employing fewer than 50 workers, declined 122,000, the report said.
Construction employment, severely affected by the downturn in housing prices, dropped by 73,000, recording 31 consecutive monthly declines. From its peak in January 2007, the construction sector has shed 1.56 million jobs, the report said. Further, employment in financial services, which includes banks and mortgage lenders, dropped 19,000, the 21st consecutive monthly decline.
A separate report from job-outplacement firm Challenger, Gray & Christmas, showed U.S. corporations reduced planned job cuts by 21 percent last month compared to July. Employers planned to cut 76,456 jobs in August -- the second-lowest figure of the year. The cuts were also 14 percent lower than those announced in August last year.
"The next four months will be very telling about the state of the job market," Challenger CEO John A. Challenger said in a statement, noting that they "are typically among the heaviest for downsizing." Moreover, he said, should monthly job cuts remain below 100,000 each month, "it will be a strong indication that the economy and job market are improving."
Though job-cut announcements have dropped month-to-month in six out of the last seven months, U.S. employers this year have exceeded last year's announced cuts by 60 percent during the same period. Challenger's unscientific count of job cuts shows more than 1.07 million jobs have been shed this year, the firm said.
For the whole of last year, Challenger said, employers cut 1.2 million jobs. Challenger's report doesn't account for seasonal variations in employment and the cuts tallied represent only a fraction of the number of actual layoffs, mostly at small and mid-sized firms.