RTTNews - Private sector employment fell by much more than expected in the month of August, according to a report released by Automatic Data Processing, Inc. (ADP) on Wednesday, although the report still showed a slowdown in the pace of job losses.

ADP said that non-farm private employment fell by 298,000 jobs in August following a revised decrease of 360,000 jobs in July. Economists had expected a decrease of about 246,000 jobs compared to the loss of 371,000 jobs originally reported for the previous month.

While employment fell by more than economists had been anticipating, the loss of jobs in August still marked the smallest drop in employment since September of 2008.

Subsequently, ADP said that employment losses are clearly diminishing, although it noted that employment usually trails overall economic activity and is still likely to decline for at least several more months.

The drop in employment continued to reflect job losses in both the service-providing and goods-producing sectors. While employment in the service-providing sector fell by 146,000 jobs, employment in the goods-producing sector declined by 152,000 jobs.

A continued decrease in employment in the manufacturing sector contributed to the drop in goods-producing jobs, although manufacturing employment fell by only 74,000 jobs, its smallest monthly decline since July of 2008.

The report also showed that employment at large businesses fell by 60,000 jobs, while medium and small businesses lost 116,000 jobs and 122,00 jobs, respectively.

ADP noted that employment at small businesses has fallen by about 2.5 million jobs since reaching its peak in January of 2008.

The bigger than expected drop in private employment may raise some concerns about the outlook for the Labor Department's monthly employment report, which includes government jobs.

Economists currently expect the Labor Department report due to be released on Friday to show a decrease of about 225,000 jobs in August compared to a decrease of 247,000 jobs in July. At the same time, the unemployment rate is expected to edge up to 9.5 percent from 9.4 percent.

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