U.S. private job losses mount, ominous for payrolls

By Burton Frierson

NEW YORK (Reuters) - Job losses and plans to lay off workers hammered the struggling U.S. economy in the final month of 2008, according to private reports that could foreshadow surprisingly grim labour market data from the government on Friday.

U.S. private employers shed 693,000 jobs in December, up sharply from the revised 476,000 jobs lost in November and far more than economists estimated, a report by ADP Employer Services said on Wednesday.

The data comes two days ahead of the government's more comprehensive non-farm payrolls report, which unlike the ADP numbers includes public sector jobs as well.

Analysts said there was reason to expect a worse outcome in non-farm payrolls than their original projection of 500,000 jobs lost for the economy in December, which was the median of economists' forecasts in an earlier Reuters poll.

"This is shockingly awful," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

"If the recent relationship between the ADP numbers -- after their recent revisions -- and the official payroll data holds, then we should expect a number of about minus -700,000 on Friday, the biggest drop in 59 years."

Most analysts noted Wednesday's ADP report was the first released under a new methodology, warning of uncertainty over its forecasting power. Still, the new system was designed to more closely mirror the government's monthly payrolls results.

Separate data showed planned layoffs at U.S. firms eased in December from the previous month's seven-year high but were up an astounding 275 percent annually as the year-old recession cut a huge swathe of destruction through job market.