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US private sector job losses ease in February

March 03, 2010

The US private sector shed the smallest number of jobs in two years in February, a payrolls firm said Wednesday in a report signaling a healing labor sector as the economy recovers from recession.

Non-farm private payrolls fell 20,000 in February on a seasonally adjusted basis, payrolls firm ADP said, matching the consensus forecast.

"The February employment decline was the smallest since employment began falling in February of 2008," the ADP National Employment Report said.

ADP revised sharply higher its January number of job losses to 60,000, from an initial estimate of 22,000.

The report came ahead of this week's highly anticipated monthly government labor report, a key indicator of economic momentum.

Though the economy posted growth in the second half of 2009, snapping a year of contraction, the troubled labor market poses a major challenge to a sustainable recovery from the worst recession in decades.

Unemployment hovering near double digits has left households hunkered down in the face of job insecurity. Consumer spending, which normally accounts for two-thirds of US economic output, has been lackluster.

The Labor Department's February labor data is widely expected to offer little relief. Most analysts expect the unemployment rate ticked up to 9.8 percent from 9.7 percent in January, with nonfarm payroll losses unchanged at 20,000.

The ADP said that two large blizzards in parts of the East Coast had only a small effect on its survey findings, but warned that the official data from the Labor Department's Bureau of Labor Statistics, which includes government jobs, would be impacted.

"The adverse weather is widely expected to depress the BLS estimate of the monthly change in employment for February, but boost it for March," the payrolls firm said.

Ryan Sweet of Moody's Economy.com said that the report provides "a sense of how the labor market might have fared without the temporary disruptions from the storms."

He noted that ADP counts actual payrolls, unlike the government's survey which is "less likely to capture those people on short-term furloughs because of weather."

The ADP reported the services sector created 17,000 jobs, the second consecutive monthly increase in the sector that drives more than two-thirds of US gross domestic product, or output.

But that improvement was not enough to offset continued job destruction in the goods-producing sector, where 37,000 jobs were lost.

In that sector, 3,000 manufacturing jobs were created, the first rise since January 2008.

ADP noted that employment at medium-sized businesses -- employing between 50 and 499 workers -- rose for the first rise since January 2008.

The increase of 8,000 jobs was modest but suggested that a large portion of the business sector was once again hiring amid a fragile recovery.

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