Private Sector Cut Only 84,000 Jobs in December

More progress on the U.S. employment front, as the private sector cut just 84,000 jobs in December -- the fewest since March 2008, according to data compiled in the ADP National Employment Report. Economists surveyed by Bloomberg News had expected private employers to cut 75,000 jobs in December. Also, November's job loss total was revised to 145,000 jobs, down from the previously estimated 169,000 total.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Separately, private placement firm Challenger, Gray & Christmas said job cut announcements by U.S. employers fell to 45,094 in December, down from 50,359 in November, and 166,348 in December 2008, Market News International reported Wednesday.

ADP Expects Job Gains in a Few Months

ADP noted that December's 84,000-job decline is the ninth straight monthly decline. "Employment losses are now rapidly diminishing and, if recent trends continue, private employment will begin rising within the next few months," ADP added.

The job loss totals in December by business size were: 34,000 (large), 25,000 (medium), and 25,000 (small).

Further, the services sector rebounded in December, adding 12,000 jobs -- the sector's first increase since March 2008. The goods producing sector lost 96,000 jobs, with manufacturing losing 43,000 positions within that category. The construction sector lost 52,000, its 35th consecutive monthly decline, bringing total construction jobs lost since the January 2007 peak to 1.777 million. The financial services sector saw a job loss of 12,000.

Investors should monitor monthly job reports because job creation is positively correlated with corporate revenue and earning gains. And as corporate earnings go, so goes the U.S. stock market.

Economic Analysis

Overall, this is another encouraging private sector jobs report, for two reasons. First, the decline in layoffs continues: The trend remains one toward eventual net, monthly job gains in the private sector. Second, the services sector posted a jobs gain for the first time in a year and a half: Given the large percentage of service jobs in the U.S. economy, if a growth trend emerges in that sector, it would bode well for overall employment gains.

Bottom Line: The U.S. job market continues to heal. A more telling set of data will be revealed Friday in the U.S. Labor Department's monthly, non-farm, payroll report, which contains both private and public sector job numbers. That report may very well show a net job gain for December, though the consensus of economists surveyed by Bloomberg News is that it will show no change in jobs in December, after an 11,000 job loss in November.
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