U.S. Companies Cut 33,000 Jobs in August

Sept. 4 (Bloomberg) — Companies in the U.S. cut an estimated 33,000 jobs in August, a private report based on payroll data showed today.

The decrease followed a revised gain of 1,000 for the prior month that was lower than previously estimated, ADP Employer Services said.

The extended housing slump, high raw material costs and weaker demand are prompting employers to cut staff. Economists forecast the Labor Department will report tomorrow that the U.S. lost jobs for an eighth straight month last month.

“The labor market seems to be a slow-bleeding thing,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said before the report. “There doesn’t appear to be an avalanche of enormous job losses but it’s enough and it appears to be continuing and there doesn’t appear to be a let up.”

The ADP report was forecast to show a decline of 30,000 jobs, after an increase of 9,000 in July, according to the median projection in a Bloomberg News survey.

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

Labor Report

Economists expect the government to report tomorrow that the U.S. lost 75,000 jobs in August, according to the median of 76 forecasts in a Bloomberg News survey. The unemployment rate probably stayed at 5.7 percent, the survey indicates.

In the first seven months of this year, the government figures showed private payrolls dropped by an average 93,000 a month. By comparison, the ADP estimate showed gains of an average 9,400 over that period.

Companies employing more than 499 workers pared their workforces by 28,000 jobs last month. Medium-sized businesses, with 50 to 499 employees, eliminated 25,000 jobs and small companies increased payrolls by 20,000, today’s ADP figures showed.

The ADP report is based on data from 399,000 businesses with about 24 million workers on payrolls.

Companies are cutting back as the economy slows and the weaker labor market forces consumers to rein in their purchases. Adjusted for inflation, consumer spending fell in June and July, the Commerce Department said on Aug. 29.

Marvell Technology Group Ltd., the maker of chips for phones such as the Blackberry, last week provided sales projections that missed analysts’ estimates for this quarter.

Marvell’s Outlook

“If you look at the housing situation, the debt situation and gas prices, it adds up to something unfavorable,” Clyde Hosein, chief financial officer of Marvell, which is based in Hamilton, Bermuda, and is run from Santa Clara, California, said in an interview on Aug. 28.

Consumer confidence remains at low levels. The Conference Board said Aug. 26 that while its consumer confidence gauge for August rose, the share of people saying jobs were hard to get reached the highest level since October 2003 and those categorizing jobs as plentiful declined.

UAL Corp.’s United Airlines, the world’s second-largest carrier, will eliminate 1,550 flight attendant jobs, the Association of Flight Attendants-CWA said on Aug. 27. The cuts don’t include 290 of the most-senior attendants who accepted buyout offers made in June, airline spokesman Jeff Kovick said in an interview.

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

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net.

Last Updated: September 4, 2008 08:37 EDT
By Courtney Schlisserman

Source: Bloomberg

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