US employers are cutting their workforces at a faster pace than economists had predicted, according to a new survey that suggests the grip of recession is tightening. Private sector firms shed 693,000 jobs in December, up sharply from the 476,000 lost the previous month, ADP Employer Services, a payroll administrator, said yesterday. The number was more than 200,000 higher than forecast and hit share prices on both sides of the Atlantic.
The ADP survey is closely monitored by economists and market participants because it gives an early clue to the official unemployment rate, which will be published by the US government tomorrow and which includes public sector jobs. Rising unemployment - and the rising fear of it - has been behind the sudden slowdown in consumer spending that pushed the US economy into a trough in the final months of 2008, and it foreshadows continued weakness this year.
Joel Prakken, the chairman of Macroeconomic Advisers, which jointly developed the ADP report, said its December reading suggested a loss of about 670,000 jobs in the overall economy - higher than the 500,000 economists are currently predicting for tomorrow's number. Mr Prakken said he expects a little more than 2 million US job losses over the next year.