298,000 Jobs Shed in August, ADP Says

Posted by: John Tozzi on September 2, 2009

Private non-farm employers cut 298,000 jobs in August, according to estimates by payroll company ADP, a figure that disappointed analysts’ expectations but still showed a gradual easing of job losses.

Businesses with fewer than 50 employees lost 122,000 jobs in August, the smallest decline since September 2008, according to the report. Mid-size businesses (with between 50 and 500 employees) lost 116,000 jobs, and large companies lost 60,000. While that sounds like small businesses bear the brunt of job losses, it’s less severe when you consider that they account for a larger share of employment, says Joel Prakken, chairman of Macroeconomic Advisers, which developed the report.

Monthly job losses will continue to diminish for several months before employment hits bottom around the end of this year, Prakken says. He expects positive employment growth in 2010. The total 298,000 jobs lost was more severe than analysts’ expectations of around 250,000 but not so far off that it’s statistically meaningful, Prakken says.

Small business hiring may lead the recovery since small companies are more concentrated in the service sector, which has a better outlook than the goods producing sector. “Small businesses have their challenges in terms of access to capital and financing conditions, but I do expect them to participate in the recovery once it gets going,” Prakken says.

The Labor Department reports official employment figures for August Friday morning. That report should show fewer net jobs lost because it includes government hiring, Prakken says, but is still likely to come in below analysts’ expectations.

Reader Comments

James Robinson

September 2, 2009 10:58 AM

This does not really help the bullish sentiment on the market. I think we retest 8,500 on the Dow quite soon.
www.lawrencegmcdonald.com

Jim

September 2, 2009 10:59 AM

Nonsense. The job numbers are going to be falsely skewed by 'cash for junkers!' That is why it is called 'stimulus!" It is not a permenent correction for the good.

So now auto inventory is now depleted (mostly for Toyota) and a few workers will go back to the assembly lines to build cars no one can afford without government intervention! So in my own opinion, we will see decrease in unemployment priort to elections long enoouhg for loser politicians to say "See, it's working!" If the stimulus really worked, the car buyers would still be in the car showrooms buying instead of looking!

Jim II

September 2, 2009 11:25 AM

Yes, exactly what Jim says!

Michele

September 2, 2009 11:28 AM

Here's where we are going: permanent 10 (or 15%) unemployment, the rich get richer and the poor poorer. The middle class will pay for all of the social programs, but their earnings will go down; so will their standard of living. The high unemployment will make workers (99.9% of the population) be afraid to ask for benefits, better pay, sick days and vacation (like the month they get off EVERYWHERE in Europe - with socialized medicine). This is the big reset button high capitalism has been yearning for. We're in for a tough 10-20 years.

LaughtingAtJim

September 2, 2009 11:33 AM

Jim, if so many people didn't actually believe what you think, it would be funny.

To bad these same people (and you probably) don't mind wasting over 33000 times that amount in Iraq to date while at the same time adding to vet expenses by supporting disabled vets wounded or harmed in the current Iraq war.

To me, 3b for the cash for clunkers seems like a bargain for a few jobs. Of course some people have problems thinking about the big picture and tend to mostly focus on areas they like to belittle others about.

Hopefully the economy will get better, unfortunatly most our political leaders do not have the best interest of the majority of people, dems and rep..... including our current president. All we can hope for is the best.

sensetti

September 2, 2009 11:39 AM

above comments correct

John Tozzi (BusinessWeek reporter)

September 2, 2009 11:41 AM

Thanks everybody for your comments. For what it's worth, the economist on the call this morning said there was very little evidence that cash-for-clunkers had a big impact on employment in August.

I'd like to keep the discussion on topic and hear from some business owners and workers in small firms -- are you seeing layoffs slow down? Are you expecting to hire soon? How has your outlook changed from earlier this year?

DJ Willard

September 2, 2009 11:42 AM

As a reporter/investor commented on CNBC last year, "why are we even listening to a private company for its limited data on NATIONAL payrolls?," but then, I am biased against ADPee in the 1st place from my corporate experience with them.

Sounds just like another group of C-Levels CYA by saying "here's why we're (ADPee) going to be doing so badly in a couple of months and it has NOTHING to do with being too fat or spending too much on needless, additional acquisitions."

ADP, notoriously off target.

gitfidl_pickr

September 2, 2009 11:50 AM

Michele is right! (I a not sure I'd place a threshhold at 10% or 15% but a permanent loss of jobs at or greater than that level. The middle class will take the hit. Capital goes where it earns returns (India, China, Europe, NAFTA) and leaves the U.S. (to class action lawsuits and union featehr bedding) .. somewhere in the future GM is gone, Chrysler is gone, unions have less power (but now the US is socialist) so there is no middle class and capital still goes where it earns a profit.

Rob

September 2, 2009 11:57 AM

The difference is not statistically meaningful? Huh..you dont need to be a genius to see that it is very meaningful as it is close to 20% more than expected (19.6% higher to be exact).

Nice spin attempt but anyone with a brain can see (1) job losses are not going down by that much and (2) the actual vs estimated difference is material.

MATT

September 2, 2009 11:59 AM

American workers are not in tune with the wider World. There are now 3.5 Billion workers outside the US. 20 years ago it was some where around 1 Billion and many of them were in Western Europe where labor cost was comparable to the US. Today Chinese, Indian and Eastern European workers can do all the same jobs as the line UAW worker at Chrysler and GM (and for 1/10th the cost or less). If you are an hourly US employee and feel entitled to $60/hour plus benefits you need to wake up. IT professionals are now competing with India for jobs and somehow I don’t see an entitlement mentality from them like I do with blue collar groups. The days of entitlement in this country and the World are over. The sooner we come to grips with this the faster we can move into the 21st Century. If not we'll be as relevant to the World's Economy as the United Kingdom.

Jeff

September 2, 2009 12:00 PM

Michele couldn't be more misguided. The wealthy (or at least those making more than $100,000 per year) pay the lion's share of taxes. What will happen though, if the current administration has its way, is that the rich will be soaked even more which will slow employment gains. When the huge entitlement programs start to go bust is when the middle class will get hit. Then even the taxi driver will be paying 40% of his or her earnings in taxes. Then we will finally be like Europe

brandon

September 2, 2009 12:06 PM

Jim, I work at a car dealership, and we did not hire a SINGLE extra person to help with the program.

Any dealership that did would be out of their effing mind. it would mean hiring someone for 4 weeks and then letting them go again.

If you're going to have an opinion and be angry, at least have a valid REASON.
cash for CLUNKERS has nothing to do with this jobs data.

t1m2ink

September 2, 2009 12:08 PM

Wouldn't we expect as the number of employed decreases that the number of additional employed would also decrease?

As the number of employed approaches 0, the number of additional unemployed each period must also approach 0.

The reported number, therefore, may mean nothing.

Tom Dion

September 2, 2009 12:10 PM

Michele's post of 09/02 took my message right out from my brains --well done and right on target!

In years to come when people mature to a higher purpose (what's taking so long?), it will come to pass that our form of (c)apitalism is deemed highly destructive to any society.

Europe anyone? Check out Finland's middle class and how it is thriving!

Hemi

September 2, 2009 12:11 PM

Michele is right. After we hit bottom there will be very little hiring. What we're seeing now is the full impact of outsourcing. No more easy credit to cover-up the damages. The jobs that were created from imaginary wealth won't be coming back.

Patrick

September 2, 2009 12:22 PM

" is that the rich will be soaked even more which will slow employment gains."

Do you want to compare Bush job numbers with Clintons when the rich were being "soaked" as you call it?

Of course you don't want to do that... under Clinton nearly 10 times more jobs were created in 10 years.

Jamie

September 2, 2009 12:27 PM

"The total 298,000 jobs lost was more severe than analysts’ expectations of around 250,000 but not so far off that it’s statistically meaningful, Prakken says."

--Is it normal in these estimates that a 20% misprediction is considered to not be statistically meaningful? What type of statistics are run to determine whether the discrepancy is significant?

John Tozzi (BusinessWeek reporter)

September 2, 2009 2:44 PM

I should clarify that when he says the variation is not statistically meaningful, that's because of the margin of error involved in the forecasting estimates, which I'm told is around 100,000 jobs for monthly labor reports. So the consensus of economists trying to predict employment changes can vary pretty widely from the actual job numbers.

That sounds like a lot compared to the margins of error we see in things like opinion polls. But remember, this is fundamentally different. A poll uses a sample to gauge the sentiment of a larger population in percentage terms, while in this case the economic forecast is trying to measure the behavior of employers across the economy last month, and express it in hard numbers, not percentages. So it doesn't really surprise me that there's a lot of variation there.

Karl

September 2, 2009 6:27 PM

The reason July's & August's numbers are lower is this- July & August are the two TOP months for VACATIONS! Watch how the job losses accelerate in the coming months, & into 2010. Anyone who believes that things are getting better must have government jobs that are GUARANTEED; like our wonderful POLITICIANS!!!

ronnie

September 3, 2009 2:30 AM

hmmmmm when will people learn that our govt and banking system is controlled by outsiders who don't care about the average citizens of america? do some research and learn. learn about the federal reserve. no more federal than federal express. find out who the most powerful lobby is in the usa. bickering about all of the problems is useless unless you're willing to truly understand why these problems exist in such magnitude in the first place

Mike

September 3, 2009 9:05 AM

Michele,

You are officially my hero. "nuff said"

harleyrider2009

September 3, 2009 5:53 PM

New jobless claims dip less than expected to 570KBy MARTIN CRUTSINGER (AP) – 1 hour ago
WASHINGTON — New jobless claims fell slightly last week while the number of people receiving unemployment benefits rose, a sign the job market's recovery will be long and bumpy.
The Labor Department says the number of laid-off workers applying for benefits dipped to 570,000 last week, a weaker performance than the drop to 560,000 that economists expected.
The number of people receiving jobless benefits totaled 6.23 million for the week ending Aug. 22, up 92,000 from the previous week, which had been the lowest level since early April. Economists surveyed by Thomson Reuters had expected that number to fall to 6.13 million.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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