Joel Prakken, spokesperson for the report, told CNBC that the economy is struggling at a pace not seen since 1981 or perhaps even since the Second World War.

The consensus was expecting a decline of 493k; forecasts prior to the release ranged from -250k to -550k.

This is the first month ADP has been using a new methodology which is intended to provide a more accurate picture of the labour market.

Prior to the release, Sal Guatieri, senior economist at BMO Capital Markets, explained the new construction: "The new methodology uses the raw ADP figures, plus data on jobless claims and previous payrolls, to model current payrolls, resulting in a much smaller error compared with the previous method which relied solely on the ADP figures."

Employment in the goods-producing sector declined 220,000 in the month, the 23rd consecutive monthly decline. Employment in the manufacturing sector declined 120,000, marking its 27th decline over the last 28 months.

Large businesses - firms with 500+ workers - saw employment decline 91,000 in December, while employment among small-size businesses - those with fewer than 50 workers - declined 281,000. Medium-size businesses saw 321,000 jobs vanish in the month.

"Sharply falling employment at medium- and small-size businesses clearly indicates that the recession has now spread well beyond manufacturing and housing-related activities," the report said.

Construction employment lost 102,000 jobs in the month, its 21st straight decline.

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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