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ADP Employment Shows Private Employers Shed 203K Jobs in October!

Wed, Nov 4 2009, 13:39 GMT
by ecPulse.com analysis team

ecPulse.com

The U.S. labor market is still on the receiving end of the worst recession since the Great Depression, as employers continue to layoff workers in a bid to save some costs and survive the ongoing economic weakness, as today the ADP employment report signaled that the bleeding in the labor market continues.

The ADP employment report showed that private employers shed in October 203,000 jobs following the prior revised 227,000 lost jobs reported back in September and slightly below median estimates of -198,000 lost jobs, as this further indicates that the labor market continues to pose threats to the ongoing economic recovery, as employers continue to reduce their workforce.

The labor market has been so far the major concern over the past few months, as unemployment rose to a 26-year high at 9.8% in September and is still expected to rise further over the upcoming few months and will probably exceed 10% before the end of this year, and that should add further pressures on the ongoing recovery, as income growth and accordingly consumer spending will be affected negatively.

Consumer spending accounts for nearly 2/3 of economic activity in the United States, whereas rising unemployment alongside tightened credit conditions will probably continue to weigh down on economic growth, and accordingly, we shouldn’t expect the economy to be able to grow over a strong pace but over a gradual pace.

The U.S. economy grew by 3.5% during the third quarter according to the advanced GDP estimate, however it’s widely expected that the economy will slowdown during the fourth quarter of this year, as the effects of the government’s fiscal stimulus starts to fade. Hence, personal consumption rose during the third quarter due to the government’s several aid programs to boost spending.

However, with the lack of governmental aid we should expect the economy to suffer, as Americans will be left to face the ongoing weak economic conditions, however, the U.S. economy seems to be on the right track to recovery, though the process will probably take some time before it materializes on ground.

Today’s ADP Report comes as a warm up for Friday’s jobs report, which is expected to show that unemployment rose in October to a new 26-year high at 9.9%, and today’s figures suggest that Friday’s jobs report will continue to signal that employers in the United States are still laying off more workers despite the recent improvement in economic conditions, though the pace of layoffs has been easing indeed, yet that is probably a result of the ongoing governmental support for the labor market…

Published on  Wed, Nov 4 2009, 13:40 GMT