More Signs of Job Weakness

NEW YORK (CNNMoney.com) -- February was another bad month for jobs as two key employment reports showed more signs of labor weakness Wednesday.
In the private sector, nonfarm employment declined by 23,000 jobs for the month, according to the ADP National Employment Report.
The drop marks the first-ever decline in the two-year history of the report. Though the report did not exist in 2003, ADP estimates that the last decline in nonfarm private employment would have occurred in that year.
Service provider jobs grew 47,000 while employment in the goods-producing sector fell by 70,000, marking the 15th straight monthly decline in that category. Manufacturing jobs fell for the 18th straight month, declining by 40,000.
Hit by mortgage market woes, employment in the construction sector fell by 30,000 jobs. The sector has shown a decline in every month since August 2006, and has lost a total of 236,000 jobs since then.
Employment in the struggling financial sector lost 5,000 jobs, ADP said.
"This report really isn't a surprise," said co-director of the Center for Economic and Policy Research, Dean Baker, who believes that the slumping housing market has taken a toll on consumers whose homes have plummeted in value.
The decline in cash flow has significantly weakened the economy, which has increasingly been unable to support jobs across multiple sectors, Baker argued.
"When equity drops, people have to start saving; when consumption goes down, everyone gets hit," he said.
A second study also revealed a decline in employment last month. A Challenger, Gray & Christmas Inc. report showed planned job cuts announced by U.S. employers fell 3.9% in February, but the month still showed a decline of 72,091 jobs.
Government and retail jobs were hit the hardest, according to the Challenger report, with 10,870 jobs lost in the government sector and 6,918 employees cut in retail. It marked only the second time in seven months that the financial sector did not top the list, suggesting that the credit crunch has spread to other sectors.
"The fact that these two sectors topped the job-cut list in February is clear evidence that the slowdown has moved beyond the housing and financial industries," said John A. Challenger, chief executive officer of the employment consulting firm, in a statement.
The report shows that job cuts in the first two months of 2008 are essentially even with the same period last year, and monthly cuts have not approached the 140,000 level recorded during the 2001 recession.
"Despite increased layoffs in several industries, job-cut activity is still well below levels we would expect in a recession," said Challenger. "With companies currently cutting at half that [2001] level, it appears that they do not expect this slowdown to be deep or prolonged."