US private sector ‘cut 473,000 jobs in June’

WASHINGTON (AFP) — The US private sector shed 473,000 jobs in June, a survey by payrolls firm ADP showed Wednesday, highlighting ongoing weakness in the labor market despite signs the economy is stabilizing.

The June job cuts were worse than the 395,000 expected by most analysts but lower than 485,000 in May, which was revised from the previous 532,000 figure.

Monthly employment losses in April, May, and June averaged 492,000, a notable improvement over the first three months of the year, when monthly losses averaged 691,000, according to the ADP National Employment Report.

“Nevertheless, despite some recent indications that economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least several more months, although perhaps not as rapidly as during the last six months,” ADP said.

The ADP figures came a day ahead of the keenly awaited June government labor market report, which would provide the latest economic snapshot of the world’s largest economy reeling from recession since December 2007.

While the ADP report was not as dire as the initial headlines indicated when taking the May revision into account, “there is a heightened risk of disappointment in the nonfarm payrolls number that will be reported Thursday,” said Briefing.com’s Patrick O’Hare.

Most analysts are expecting 363,000 job cuts in the June nonfarm payrolls report Thursday.

Because employment is a lagging indicator, layoffs are forecast to extend into 2010, even if the economy resumes growing in the second half as expected, said Ryan Sweet, senior economist with Moody’s Economy.com.

“If businesses fail to slow the pace of job cuts, the stabilization in consumer spending and home sales will unravel, and the recession won’t end later this year as forecast,” he warned.

Another report tracking the jobs market showed a less gloomy labor market.

Chicago-based placement firm Challenger, Gray & Christmas said US employers last month announced the fewest job cuts in more than a year.

Announced job cuts fell to a 15-month low of 74,393 in June from 81,755 in the same month a year ago, providing further evidence that the worst of the economic crisis may have passed, the company said.

The June job cuts were 33 percent lower than the 111,182 layoffs announced in May and marked the first time since last September that the monthly tally was less than 100,000, it said.

The monthly government labor report for May had suggested that the pace of massive job cuts appeared to be easing.

Some 345,000 nonfarm jobs were shed in May — much lower than the 520,000 expected and about half the monthly decline of the past six months.

But the unemployment rate, based on a separate survey of households, rose sharply from 8.9 percent to a worse-than-expected 9.4 percent, the highest level since August 1983.

President Barack Obama warned two weeks ago that “it’s pretty clear now that unemployment will end up going over 10 percent” and said it would take time for an economic recovery to translate into job growth.