ADP Says U.S. Companies Reduced Payrolls by 697,000

[Joanne98]

By Bob Willis

March 4 (Bloomberg) -- Companies in the U.S. cut an estimated 697,000 workers in February, indicating the recession is intensifying, a private report based on payroll data showed today.

The drop in the ADP Employer Services gauge was larger than economists forecast and followed a revised cut of 614,000 for the prior month.

Employers are cutting staff as demand plummets in the face of strained credit and battered housing and equity markets. The Labor Department may report in two days that employers cut payrolls in February for a 14th consecutive month, putting jobs losses in the current downturn at more than 4.2 million, according to a Bloomberg survey.

“Firms are still paring back workers as the economic slump deepens,” Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina, said before the report. “I expect this trend to continue throughout this year.”

The ADP report was forecast to show a decline of 630,000 jobs, according to the median estimate of 26 economists in a Bloomberg News survey. Projections ranged from decreases of 500,000 to 770,000.

ADP revised its methodology late last year in a bid to limit differences between its calculations and the government’s payrolls numbers.

The figures include only private employment and do not take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

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