RTTNews - Private sector employment fell by more than economists had been expecting in the month of June, according to a report released by Automatic Data Processing, Inc. on Wednesday, with the data suggesting continued weakness in the labor market.

The report showed that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.

While employment fell by more than expected, the decrease in jobs marked the smallest drop since October of 2008, when employment fell by 352,000 jobs.

Additionally, monthly employment losses in April, May, and June averaged 492,000, which is a significant improvement from the average monthly loss 691,000 jobs seen in the first three months of the year.

Nonetheless, ADP said that employment is likely to decline for at least several more months despite some recent indications that economic activity is stabilizing, as employment usually trails overall economic activity.

The bigger than expected decrease in jobs in June reflected continued weakness in the both the service-providing and goods-producing sectors.

The service-providing sector lost 223,000 jobs in June, while employment in the goods-producing sector fell by 250,000 jobs. The fortieth consecutive monthly decline in manufacturing employment contributed to the drop in goods-producing jobs.

Additionally, small and medium sized businesses continued to lose the most jobs, with employment falling by 177,000 and 205,000, respectively. Large businesses saw employment decline by 91,000.

ADP noted that small-size businesses have shed nearly 2.3 million jobs since reaching peak employment in January 2008.

The private sector report may raise some concerns about the strength of the Labor Department's monthly employment report due to be released on Thursday.

The Labor Department report, which includes government jobs, is expected to show that employment fell by 363,000 jobs in June following a decrease of 345,000 jobs in May. The unemployment is expected to edge up to 9.6 percent from 9.4 percent.

However, Peter Boockvar, equity strategist at Miller Tabak noted, Although the [ADP] data is very helpful, the month to month relationship with the government payroll data has been sketchy.

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