ADP Says U.S. Companies Reduced Payrolls by 742,000
By Bob Willis
Companies in the U.S. cut an estimated 742,000 workers in March, pointing to no relief in sight for the labor market amid the longest recession in seven decades, a private report based on payroll data showed today.
The drop in the ADP Employer Services gauge was larger than economists forecast and the most since records began in 2001. February’s reading was revised to show cut of 706,000 workers, up from a previous estimate of 697,000.
Companies are slashing staff as tight credit conditions and shrinking household wealth cause sales to shrink. The Labor Department may report in two days that employers cut payrolls in March for a 15th consecutive month, putting jobs losses in the current downturn at more than 5 million, according to a Bloomberg survey.
“The weakness is distributed across all components of the economy,” Joel Prakken, chairman of Macroeconomic Advisers LLC in St. Louis, said in a conference call. “We are going to see several more months of serious bleeding before we see lesser job losses.”
The ADP report was forecast to show a decline of 663,000 jobs, according to the median estimate of 30 economists in a Bloomberg News survey. Projections were for decreases ranging from 525,000 to 750,000.
A government report April 3 may show payrolls at companies and government agencies shrank by 658,000 in March and unemployment rose to a 25-year high of 8.5 percent, according to a Bloomberg survey of economists.
The ADP figures comprise 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.
Another report today also reflected a weak labor market. Job cuts announced by U.S. employers nearly tripled in March from a year earlier, led by planned cutbacks at government agencies, pharmaceutical and aerospace and defense firms, Chicago-based placement firm Challenger, Gray & Christmas Inc. said.
Firing announcements rose by 181 percent from March 2008, to 150,411. Compared with the prior month, announcements fell for a second consecutive time, the first two-month decrease in job cuts since February-March 2007.
Today’s ADP report showed a reduction of 327,000 workers in goods-producing industries including manufacturers and construction companies. Employment in manufacturing dropped by 206,000. Service providers cut 415,000 workers.
Companies employing more than 499 workers shrank their workforces by 128,000 jobs. Medium-sized businesses, with 50 to 499 employees, cut 330,000 jobs and small companies decreased payrolls by 284,000.
Industries cutting jobs ranged from automakers and high- tech companies to materials makers and service companies.
International Business Machines Corp., the world’s biggest computer-services provider, reduced as many as 5,000 jobs last week, according to a person familiar with the matter. That added to 4,000 cuts already made since the beginning of the year.
“I don’t believe this is the end,” said Lee Conrad, coordinator for an employees’ group pushing for union recognition. “We’re losing jobs at a record rate inside IBM.”
Tyson Foods Inc., the largest U.S-based meat producer, said March 27 it will close a processed meats plant in Oklahoma and cut 580 jobs to move production to other locations.
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.