In a sign the recession is spreading, private sector employers cut 742,000 jobs in March, according to ADP’s national employment report released Wednesday.
The decline was nearly 80,000 more than the average analyst forecast of 663,000 job losses and the largest monthly payroll decline since ADP began tracking such activity in January 2001.
ADP also revised upward its February job loss figure to 706,000 from a previously reported 697,000.
The report heightens concern about the Labor Department’s March employment report which is due out Friday. Analysts forecast that the government will say the economy lost 660,000 jobs in March and the unemployment rate rose to 8.5 percent, but the worse-than-expected news from ADP has stirred worry of expectations being overly optimistic.
Large employer layoffs usually get the biggest headlines but they accounted for the smallest number of job losses in March. ADP said firms with 500 or more employees reduced payrolls by 128,000 while medium-sized businesses with payrolls between 50 and 499 employees eliminated 330,000 jobs and small businesses with less than 50 employees cut 284,000 jobs.
Where the cuts are coming is a concern to Joel Prakken, chairman of Macroeconomic Advisors LLC which conducts the survey for ADP.
“The sharp employment declines among medium- and small-size businesses indicate that the recession continues to spread aggressively beyond manufacturing and housing-related activities to almost every area of the economy," Prakken said.
“Despite some recent indications that stock prices, consumer spending, and housing activity may be bottoming out, employment, which usually trails overall economic activity, is likely to remain very weak for at least several more months," Prakken said.
The ADP report is compiled from actual payroll data and measures the change in total nonfarm private employment each month.
According to the payroll services company ADP, United States private sector employers cut 742,000 jobs in in March. The figures were almost 80,000 more than the average analyst prediction of 663,000 losses. This is the largest monthly payroll decline since January 2001, when the ADP began tracking job activity.

ADP also updated its job loss statistics for February, from 697,000 to 706,000.

"The sharp employment declines among medium- and small-size businesses indicate that the recession continues to spread aggressively beyond manufacturing and housing-related activities to almost every area of the economy," said Joel Prakken, the chairman of the company that conducts the ADP survey, Macroeconomic Advisors LLC.

"Despite some recent indications that stock prices, consumer spending, and housing activity may be bottoming out, employment, which usually trails overall economic activity, is likely to remain very weak for at least several more months," he added.

The US Labor Department's report for employment statistics for March is due to be out on Friday. Analysts predicted that the department will announce the unemployment rate increased to 8.5% with 660,000 jobs eliminated in March. However, the bad news from ADP has prompted some to think that the current forecasts are too optimistic.