Private sector employment showed another notable decline in the month of July, according to a report released by Automatic Data Processing, Inc. (ADP) on Wednesday, although the pace of job losses slowed to its slowest rate since October of 2008.
The report showed that non-farm private employment fell by 371,000 jobs in July following a revised decrease of 463,000 jobs in June. Economists had been expecting a decrease of about 350,000 jobs compared to the loss of 473,000 jobs originally reported for the previous month.
ADP said that the drop in jobs in July was the smallest since of a decrease of 352,000 jobs in October of 2008, adding that the decrease continues the notable improvement seen between the first and second quarters of 2009.
However, the payroll processor said that employment is likely to decline for at least several more months despite recent indications that overall economic activity is stabilizing, as employment usually trails overall economic activity
The drop in private sector employment in July reflected decreases in jobs in both the service-providing and goods-producing sectors.
While the service-providing sector lost 202,000 jobs, employment in the goods-producing sector fell by 169,000 jobs due in part to the loss of 99,000 manufacturing jobs. The drop in manufacturing jobs marked the smallest monthly decline since September of 2008.
The report also showed notable decreases in employment at small and medium-size businesses, which lost 138,000 jobs and 159,000 jobs, respectively. Employment at large businesses fell by a more modest 74,000 jobs.
ADP noted that small businesses have shed nearly 2.4 million jobs since reaching peak employment in January of 2008.
While the pace of jobs losses has slowed considerably, the bigger than expected monthly decline shown by the ADP report may raise some concerns about the Labor Department's monthly employment report to be released on Friday.
The Labor Department report, which includes government jobs, is expected to show a decrease of 328,000 jobs in July following a decrease of 467,000 jobs in June. The unemployment rate is expected to edge up to a twenty-six year high of 9.6 percent from 9.5 percent.