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(CEP News) - A survey of private employment in the U.S. shows that December was the worst month in decades for the labour market. Nearly 700,000 jobs vanished in the private employment survey -- suggesting that forecasts for half-a-million job losses in Friday's official statistics may be an underestimate.
Private non-agricultural employment in the United States fell by much more than consensus with a decline of 693k jobs in December, according to a report released from Automatic Data Processing on Wednesday morning. The previous month's data were unrevised down to 476k jobs lost from -472k. Joel Prakken, chairman of Macroeconomic Advisors, which compiles the ADP employment report, said in an interview on CNBC that he is expecting the current recession to be the worst since 1981, and it could perhaps the worst recession since the Second World War. "The economy is really struggling," he said. "The recession is rippling out into all parts of the economy." 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,
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