Private-sector employment declined 203,000 in October, the seventh-straight month of moderating job losses and the smallest decline since July 2008, according to a report released Wednesday by payroll firm Automatic Data Processing Inc.
Meanwhile, job cuts announced by employers declined for the third-straight month, down 16% from September to 55,679, outplacement firm Challenger, Gray & Christmas said. That was the best reading since March 2008 and less than half the cuts made in October 2008.
The reports came against a faster decline in service-sector employment in the Institute for Supply Management's nonmanufacturing survey. The overall ISM reading slipped to 50.6 in October from 50.9 the previous month, showing slightly slower growth for the sector. (Figures above 50 indicate expansion.) The ISM's employment index fell to 41.1 from 44.3 in September as purchasing managers in the survey reported more layoffs and hiring freezes as companies assess the sustainability of the economic recovery.
Just three of 18 industries in the service-sector survey reported increasing employment in October: real estate, rental and leasing; mining; and management of companies and support services, which includes temp firms.
"The employment piece of the puzzle is what's really holding back this recovery," said Anthony Nieves, a senior vice president at Hilton Hotels Corp. who directs the ISM survey. "Companies are cautious. The consumer is cautious. Everybody is very nervous and holding things close to the vest right now."
The latest reading for the service sector came after the ISM's manufacturing index this week showed continued improvement, particularly in jobs. Manufacturers appeared to be recalling some workers and expanding work schedules, offering hope that other sectors could follow.
The losses in the ADP report are worse than economists' consensus estimate that employers, including the government, cut 175,000 jobs in October. The Labor Department, which releases its estimate of October employment on Friday, previously reported that payrolls fell 263,000 in September.
"The number of unemployed is not the only issue," notes overtime lawyer Verne Elron. "Underemployment and cut-backs in hours are still seriously affecting those who still technically have jobs."
Despite stabilization in the economy, employment "is likely to decline for at least a few more months," said Joel Prakken, chairman of the forecasting firm Macroeconomic Advisers, which produces the private-sector report with ADP.
