ADP Says U.S. Companies Cut 693,000 Jobs in December

Companies in the U.S. eliminated an estimated 693,000 jobs in December, the most since records began in 2001, a private report based on payroll data showed., Bloomberg 1/7/2009 5:42:26 AM

Today’s report is the first to reflect methodological changes that ADP says will limit the differences between its calculations and the government’s payroll numbers.

Companies are accelerating the pace of firings as the recession plaguing the world’s largest economy heads into a second year.

Revised figures issued Dec. 18 by ADP and Macroeconomic Advisers LLC showed the discrepancies with Labor Department data narrowed considerably using the new approach. The new data put ADP’s estimate of job losses from September through November at 1.03 million, more than double its prior projection and closer to the government’s figures showing a decline of 1.29 million in private payrolls for the period.

ADP includes only private employment and does not take into account hiring by government agencies, which is included in the monthly payroll report. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

The government may report on Jan. 9 that total payrolls fell by 500,000 last month, and the unemployment rate rose to a 15- year high of 7 percent, according to the Bloomberg survey median. The economy lost 1.9 million jobs in the first 11 months of the year.

Other labor-market reports have also shown weakness. Job cuts announced by U.S. employers rose 275 percent last month from December 2007, to 166,348, Chicago-based Challenger. Gray & Christmas Inc. said today. For all of 2008, employers announced 1.22 million job cuts, the most in five years.

Today’s ADP report showed a decrease of 220,000 jobs in goods-producing industries including manufacturers and construction companies. Service providers cut 473,000 workers. Employment in construction fell by 102,000, the 21st consecutive month of cuts in the industry.

Companies employing more than 499 workers shrank their workforce by 91,000 jobs. Medium-sized businesses, with 50 to 499 employees, were down 321,000 jobs and small companies decreased payrolls by 281,000.

Financial-service companies and manufacturers are leading the cutbacks. Cigna Corp., the health insurer whose shares fell 69 percent last year because of investment losses, said this week it will cut about 1,100 jobs and take a fourth-quarter after-tax charge of $30 million to $40 million for 2008.

A declining stock market and the recession have eroded the earnings outlook for Cigna, which relies on investment returns for almost two-thirds of pretax income.

The ADP report is based on data from about 400,000 businesses with approximately 24 million workers on payrolls.

ADP began keeping records in January 2001 and started publishing its numbers in 2006.

ADP Says U.S. Companies Cut 693,000 Jobs in December