Private non-agricultural employment in the United States fell by much more than consensus with a decline of 157k jobs in October, according to a report released from Automatic Data Processing on Wednesday morning. This marks the worst monthly decline since November 2002.

The previous month's data was revised down to -26k from an originally reported -8k.

"Note that this month, the ADP Report does not reflect the strike of some 27,000 machinists in the aerospace industry during September and October," the report said.

The consensus had expected a drop of 100k, with forecasts prior to the release ranging from -70k to -245k.

The loss of labour was driven by a 126k decrease in the goods-producing sector, which has been declining for 23 consecutive months. Manufacturing also pulled back 85k jobs, marking the 26th month in a row of declines.

Those losses were compounded by a 31k decline in the service sector, the first decline in the sector since November 2002.

Large businesses - those with 500 or more workers - saw employment decline 41k in the month, while medium-size companies saw a loss of 91k jobs. Employment among small businesses - those with fewer than 50 workers - fell by 25k during the month.

"This is the first outright decline in small business employment reported by the ADP Report since November of 2002, and the largest percentage decline since the economy was emerging from recession in early 2002," the report said.

The ADP report reported continued trouble in the financial and construction industries. Employment in construction dropped 45k, bringing the total loss of construction jobs since the August 2006 peak to 455k.

Employment in financial activities was not reported on.

The ADP figures are the primary tool to forecast the nonfarm payrolls report from the Bureau of Labor Statistics, the benchmark employment figure for the United States. As of Wednesday morning, economists expect the BLS report to fall by 200k on Friday.

By Patrick McGee and edited by Nancy Girgis
©CEP News Ltd. 2008