Non-farm private employment decreased a gargantuan 693,000 in December -- much worse than expected -- on a seasonally adjusted basis, ADP announced Tuesday in the ADP National Employment Report (pdf).Meanwhile, the November estimated change in employment was revised to a decrease of 476,000 from the previously-announced decrease of 250,000 jobs, ADP said.
Economists surveyed by Bloomberg News had expected the ADP report to show the loss of 495,000 private sector jobs in December.
Note: This month, ADP revised the report's methodology, hence economists say comparisons to November and prior month job reports are not recommended.
Manufacturing employment fell 120,000 in December -- its 27th consecutive monthly decline. Meanwhile, the service sector of the economy lost 473,000 jobs, the first back-to-back monthly job loss in the service sector since November 2002.
Economist Richard Felson said the December ADP private sector report shows more difficult news on the U.S. job front, with a qualifier being the report's changed methodology. "Economists have often criticized the ADP report for its lack of comprehensiveness, so we need to see several months data before forming any conclusions about the new metric, but that said, losing almost 700,000 jobs in a month is just an awful number," Felson said.
Most of the decline in employment during December was accounted for by job losses at medium-sized companies, which registered an alarming 321,000-job decline. Meanwhile, small businesses cut 281,000 jobs in October. Large-sized businesses cut 91,000 jobs during the month.
Economic Analysis: A terrible job report -- one that indicates worsening job market conditions. However, and again, economists caution that one should not read too much into the monthly ADP job report due to this month's methodology change. The more telling statistic is the U.S. Labor Department's monthly payroll report, and the December data will be released Friday, January 9 at 8:30 a.m. EST. That report is expected to show a 500,000-job decline, according to a Bloomberg News survey of economists.
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