December Unemployment Clobbers Ailing Economy

No miracles this holiday season for an already bleak job market, as U.S. private-sector firms shed 693,000 jobs in December alone, according to the ADP employment index released Wednesday — the most since ADP Employer Services began its gauge based on payroll data in 2001. “The level of unemployment is going to be higher” and may exceed 10 percent, said Martin Feldstein, former National Bureau of Economic Research president and Harvard University professor, in a Bloomberg Television interview. “It’s really bad and it needs a fix.” Large businesses — those with 500-plus workers — saw employment decline by 91,000 jobs in December, while medium-size businesses cast off a whopping 321,000 jobs and small companies dropped 281,000 jobs. “Sharply falling employment at medium- and small-size businesses clearly indicates that the recession has now spread well beyond manufacturing and housing-related activities,” ADP said in the National Employment Report. Employment in the services sector was hit particularly hard, falling 473,000, while employment in goods-producing fell by 220,000 and construction posted its twenty-first consecutive monthly decline, dropping 102,000 jobs. A steep climb from November’s revised 476,000 job losses, December’s figures were far worse than economists expected — discouragingly foretelling of dismal labor market data set to be released from the government on Friday. If the Labor Department reports findings similar to the ADP’s, total job cuts for 2008 could reach around 2.4 million, according to a Bloomberg report. At a press conference Wednesday morning, President-elect Barack Obama continued to promote his massive economic stimulus plan, much of which would be devoted to creating jobs to jolt the economy. Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.