ADP: U.S. payrolls shrink by 79,000 in June

PAYROLLS at small businesses edged up in June, while the work force shrank at mid-sized and large employers nationwide. /
PAYROLLS at small businesses edged up in June, while the work force shrank at mid-sized and large employers nationwide. /

ROSELAND, N.J. – U.S. companies cut an estimated 79,000 jobs in June, the largest decline since November 2002, erasing the revised May gain of 25,000 jobs, according to a monthly survey released today.

The decrease reported in ADP Employment Services’ private survey was significantly larger than expected. Analysts had forecast a decline of 20,000 jobs would follow the original, much larger May gain, according to the median estimate of 27 economists surveyed by Bloomberg News.

Companies are reducing their staff levels in anticipation of a decline in demand due to the slumping housing market and skyrocketing oil prices.

Most of the jobs lost last month were in goods-producing industries, including manufacturers and construction companies, which shed a total of 76,000 jobs, ADP said. Construction employment fell by 34,000 jobs in its 19th consecutive monthly decline, while employment at financial service companies declined by 3,000, ending a three-month rise.

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Service providers showed their first decline in employment since November 2002, with a net loss of 3,000 jobs.

Analysts saw little reason for optimism in the short term. “Clearly, there is more weakness to come in the labor market,” Anna Piretti, a senior economist at BNP Paribas in New York, told Bloomberg News

Large businesses – those employing more than 499 employees – cut 51,000 jobs from their payrolls, the survey found. Medium-sized businesses – with 50 to 499 workers – reduced their work forces by 35,000 jobs. Small companies reported a slight increase, however, adding a total of 7,000 workers.

The grim news about June employment accompanied a reduction in ADP’s estimate of May employment growth, to 25,000 new jobs nationwide from the original estimate of 40,000. (READ MORE) A federal report due tomorrow is expected to show private and government payrolls shrank in June for the sixth straight month, shedding 60,000 jobs, based on a Bloomberg poll of 79 economists.

ADP’s monthly report is prepared by Macroeconomic Advisers LLC, based on ADP payroll data from about 392,000 employers with more than 23 million workers nationwide.

ADP Employment Services – a division of Automatic Data Processing Inc. (NYSE: ADP) – handles payroll for 1 in 6 private-sector employees nationwide. For more information, including the ADP National Employment Report, visit www.adp.com.

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