By Mike Caggeso
The U.S. private sector cut a record 742,000 jobs in March, higher than analysts' expectations and a leap from the upwardly revised 706,000 jobs cut in February, according to a report from ADP Employer Services.
The report is based on data from about 400,000 businesses with an estimated 24 million people on payroll. According to the ADP's report, businesses with more than 499 employees shed 128,000 jobs. Companies with 50 to 499 workers slashed 330,000 workers from their payrolls. And small businesses cut 284,000 jobs.
One of the biggest losses came from International Business Corp. (IBM), which cut up to 5,000 jobs last week, a source told Bloomberg. And Tyson Foods Inc. (TSN) said last week that it will close an Oklahoma plant and cut 580 jobs there.
Another report from Challenger, Gray & Christmas Inc. said that the jobs cut in March were triple the figure cut a year earlier – largely the result of cutbacks at government agencies, and at pharmaceutical, aerospace and defense firms, Bloomberg reported.
Despite job losses mounting higher than expectations, the number doesn't paint the entire picture: ADP's report does not include government jobs.
Joe Saluzzi, co-manager of trading for Themis Trading, told Reuters the figures are a prelude to the government's non-farm payrolls report, which will be released Friday.
"Unemployment is something that has been on the back burner, as people worry about General Motors and General Electric, but it going toward double digits, and that is going to put a crimp into any plans the government has. You're seeing the market react to that now," Saluzzi said.
Meanwhile, unemployment in the 16-nation Eurozone rose to 8.5% in February, nearly a three-year high and up from 8.3% in January.
Within that number, Germany's unemployment rate rose to 7.4% from 7.3% in January, France's inched to 8.6% from 8.5%, and Spain's jumped to 15.5% from 14.8%, according to EuroStat, the European Union's statistics agency.
The 16 members of the euro area are Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
The nearly 13.5 million unemployed in the euro area – in addition to a low 0.6% inflation rate – elevates the possibility the European Central Bank will again reduce its primary lending rate to 1.0% from its record low 1.5%, according to analysts surveyed by Dow Jones Newswire.
The ECB meets tomorrow, amid the highly anticipated Group 20 meeting, which will be dominated by discussions about solving the global economic crisis.
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