Job reports paint mixed picture

A report Wednesday from Automatic Data Processing suggested that the pace of job cuts may be slowing, while a separate report from Challenger said planned layoffs hit a 5-month high in January.

ADP (ADP, Fortune 500), a payroll-processing firm, said private-sector employers cut 22,000 jobs in January, marking the smallest decline since February of 2008.

The number of cuts in December was revised down to 61,000 from the previously reported 84,000. Economists surveyed by had forecast a loss of 30,000 jobs in January.

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The service sector reported an increase of 38,000 jobs in January, marking the second consecutive month of job growth for that sector following a 21-month decline.

The figure was offset by a loss of 60,000 in the goods-producing sector and a drop of 25,000 manufacturing jobs, which marked its lowest level since January, 2008.

In a separate report Wednesday, outplacement firm Challenger, Gray & Christmas Inc, said planned job cuts had accelerated in January.

Challenger said employers announced 71,482 layoffs in January, reversing what had been a steady decline in layoff announcements.

January’s figure is up 59% from December 2009, when layoffs fell to a 24-month low of 45,094. But it was a sharp decline from the 241,749 cuts announced a year ago.

The retail and telecom sectors were the hardest hit in January, with 16,737 and 14,010 job cuts, respectively. Last month Wal-Mart (WMT, Fortune 500) said it would shed 11,200 positions at its Sam’s Clubs Warehouse outlets, and Verizon Communications (VZ, Fortune 500), announced 13,000 layoffs.

Retailers pared back their seasonal holiday employees, as well as permanent positions. “The beginning of the year is particularly rough on retail workers, as [their] employers enter one of the slower sales periods of the year.” said Challenger Chief Executive John Challenger.

The report speculated that heavy cuts could continue in retail and other sectors in the first quarter. But Challenger noted, “The increase in January is not necessarily a sign of a recession relapse.”

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Wednesday’s report precedes the closely watched monthly jobs report from the Labor Department due Friday. That’s expected to show employment levels essentially unchanged in January, according to a consensus of economists polled by, compared to a loss of 85,000 jobs in December.

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