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Wednesday, January 7, 2009

Private Sector Cuts 693,000 Jobs in December

NEW YORK (Reuters) - Private-sector employers shed 693,000 jobs in December, a private employment service said on Wednesday in a report that was far worse than expected and pointed to more ugly news from the government's jobs data due later this week.

The drop, much bigger than the revised 476,000 private sector jobs lost in November, is consistent with about a 670,000 fall in December non-farm payrolls, said Joel Prakken, chairman of Macroeconomic Advisers LLC, which jointly develops the private sector employment report with ADP Employer Services.

On Friday the government will release its non-farm payrolls report, considered the most authoritative gauge of the U.S. labor market.

After the ADP report, U.S. Treasury bonds regained some lost ground, the dollar extended its losses against the euro and the yen and U.S. stock futures slid.

The median of estimates from 20 economists surveyed by Reuters for the ADP Employer Services report was for a loss of 473,000 private-sector jobs in December.

The report for December was the first month the data was issued using a new methodology, which ADP said was designed to more closely predict the outcome of the government's non-farm payrolls report.

"It's obviously a terrible number, though everyone was expecting a terrible number," said Steven Butler, director of FX trading at Scotia Capital in Toronto.

"The initial shock is a big one...and should keep the dollar under pressure for the rest of the session," he said.