NEW YORK - U.S. payroll employment will turn positive in the early months of 2010 but the jobless rate is still likely to hit 10 percent before the cutting spree ends, Joel Prakken, chairman of Macroeconomic Advisers, said on Wednesday.

Prakken was speaking to a teleconference of journalists after the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, showed employers cut a larger than expected 254,000 jobs in September.

Prakken said there was a lot of downward pressure on state and local government employment in particular, which is not covered in the ADP report but figures into the government's more comprehensive nonfarm payrolls report.

Prakken said it would be best not to assume even modest growth in state and local government employment in the September nonfarm payrolls report, which is due on Friday.

(Reporting by Burton Frierson)