Figures show US firms laid off more employees than forecast

By Bob Willis  |   2008-7-3  |     NEWSPAPER EDITION

COMPANIES in the United States cut an estimated 79,000 jobs in June, a private survey based on payroll data showed.

The decrease was larger than forecast and followed a revised gain of 25,000 for the prior month that was less than previously estimated, the report from ADP Employer Services showed.

The biggest housing recession in a quarter century and record oil prices are prompting an increase in firings as companies brace for falling demand. The government today may report that total private and government payrolls fell in June for a sixth decline this year, according to the median forecast in a Bloomberg News survey.

"The ongoing decline in employment will accelerate," Dana Saporta, an economist at Dresdner Kleinwort in New York, said before the report. "Downside risks to growth are still significant." The ADP report, which doesn't include government jobs, overstated private employment by about 111,000 jobs a month on average for the first five months of the year.

ADP was forecast to show a decline of 20,000, after an initially reported gain of 40,000 in May, according to the median estimate of 27 economists surveyed by Bloomberg. Estimates ranged from a drop of 90,000 to an increase of 50,000.

The Labor report may show the US economy lost 60,000 total jobs in June, according to the median estimate of 79 economists surveyed.

The ADP report showed a tumble of 76,000 jobs in goods-producing industries, including manufacturers and construction companies. Service providers cut 3,000 workers, the first decline since November 2002.

Employment in construction fell by 34,000. Financial services companies fired 3,000 workers, the report said. As the housing recession is well into its third year, job losses are increasing among financial-service companies battered by mortgage defaults.

Bank of America Corp, the second-largest US bank, will cut about 7,500 jobs after buying Countrywide Financial Corp amid mounting subprime-mortgage losses, the North Carolina-based firm said last Saturday.