Employment in the private sector fell by 33,000 jobs in August, according to the latest monthly report by payroll giant ADP.
Small businesses with fewer than 50 employees added 20,000 jobs, but midsized businesses with between 50 and 499 employees lost 25,000 jobs, and large businesses with 500 employees or more cut 28,000 jobs.
The goods-producing sector dropped 78,000 jobs in August, and the manufacturing sector lost 56,000 jobs. Mortgage problems continued to hurt construction employment, which fell by 25,000, and financial employment, which declined 2,000. The services sector, however, gained 45,000 jobs.
"I view this as another in a string of reports indicating very tepid labor conditions over the first half of this year," said Joel Prakken, chairman of Macroeconomic Advisers, which compiles the reports with ADP. But he noted that the numbers do not indicate a recession, which would produce job losses in the hundreds of thousands, not tens of thousands.
Prakken believes that economic growth will be flat for the second half of this year and unemployment will grow to 6.3 percent in the first half of next year, with recent productivity gains exacerbating the unemployment picture.
"The household sector faces a lot of challenges," said Prakken, citing declining house prices and equity prices, employment losses, and banks tightening their credit standards. "There are a lot of headwinds buffeting the household sector."
The Bureau of Labor Statistics reported Friday that the private and public sectors combined lost 84,000 jobs in August.
