ADP Says U.S. Companies Reduced Payrolls by 697,000

Companies cut 697,000 jobs in the U.S. in February as the recession’s grip tightened, offering no sign the pace of the decline in payrolls is easing., Bloomberg 3/4/2009 6:38:54 AM

The drop in the ADP Employer Services gauge, a survey based on payroll data, was larger than economists forecast and followed a revised cut of 614,000 for the prior month.

Employers are cutting staff as demand plummets in the face of strained credit and battered housing and equity markets. The Labor Department may report in two days that employers cut payrolls in February for a 14th consecutive month, putting jobs losses in the current downturn at more than 4.2 million, according to a Bloomberg survey.

The ADP report was forecast to show a decline of 630,000, according to the median estimate of 26 economists in a Bloomberg News survey. Projections ranged from decreases of 500,000 to 770,000.

ADP revised its methodology late last year in a bid to limit differences between its calculations and the government’s payrolls numbers.

The ADP figures include only private employment and do not take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

Job cuts announced by U.S. employers more than doubled in February from a year earlier, led by planned cutbacks at retailers and automotive companies, Chicago-based placement firm Challenger, Gray & Christmas Inc. said today.

Firing announcements rose 158 percent last month from February 2008, to 186,350. The monthly total fell 23 percent from January’s seven-year high of 241,749 following the worst holiday retail sales season in four decades, Challenger said.

Today’s ADP report showed a reduction of 338,000 workers in goods-producing industries including manufacturers and construction companies. Employment in manufacturing dropped by 219,000. Service providers cut 359,000 workers.

Companies employing more than 499 people shrank their workforces by 121,000 jobs. Medium-sized businesses, with 50 to 499 employees, cut 314,000 jobs and small companies decreased payrolls by 262,000.

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

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

ADP Says U.S. Companies Reduced Payrolls by 697,000