Companies cut 697,000 jobs in the U.S. in February as the recession’s grip tightened, offering no sign the pace of the decline in payrolls is easing.
The drop in the ADP Employer Services gauge, a survey based on payroll data, was larger than economists forecast and followed a revised cut of 614,000 for the prior month.
Employers are cutting staff as demand plummets in the face of strained credit and battered housing and equity markets. The Labor Department may report in two days that employers cut payrolls in February for a 14th consecutive month, putting jobs losses in the current downturn at more than 4.2 million, according to a Bloomberg survey.
“We doubt any of these numbers have hit bottom yet,” Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said in a note to clients. “Employment is tanking right across the economy.”
Buckle up. This is going to be a rough ride. If there’s a silver lining here, it’s that high unemployment is going to increase demand for things like health care that you don’t lose when you lose your job. That means next time around, people won’t get hit as hard when the axes start dropping.