ADP Report Shows Slight Rise in Jobs

The service sector pushed the U.S. job market back into positive territory last month, ADP(ADP) said Wednesday, though the weak housing and manufacturing industries continued to drag on employment.

Private, nonfarm employers added 9,000 workers to their ranks last month, the payroll processor said. The report was much rosier than the 66,000 net loss that economists had expected, according to Briefing.com.

ADP also revised its June figure to show a decline of 77,000 jobs rather than the 79,000 it initially reported. However, its three-month average shows that the economy has done away with 14,000 payrolls, indicating that the job market may have improved but is still relatively weak.

With major companies like Starbucks(SBUX), Ford(F) and United Airlines parent UAL(UAUA) outlining new plans for layoffs or buyout deals on top of those reported throughout the year within the struggling auto, airlines and financial industries, there promises to be more pain ahead.

"One thing you have to be very careful about...is the time horizon over which those layoffs are going to occur," says Joel Prakken, chairman of Macroeconomic Advisers, which collaborates with ADP on its monthly job report. "Certainly when the auto industry and the airline industry and even the financial sector says it's laying off people, it's usually spread out over time. It's never as concentrated as the news stories suggest."

Offsetting those woes was a still-robust service sector, which added 74,000 jobs, outweighing the 65,000 drop in goods-producing industries' employment.

The growth of small businesses provided a stark contrast to declines at medium and large firms, as has been typical over the past two years.

Small firms "hold up better in periods of economic weakness," Prakken says, simply because they have less fat to trim: A company with five or 10 employees might need every last one to operate as it does. Small businesses are also concentrated in the services sector, allowing them to avoid "the epicenter of the housing meltdown," Prakken adds.

On the other end of the spectrum, the manufacturing industry slashed 49,000 positions, nearing two years of consecutive monthly losses.

Declines in construction jobs, as well as those related to home sales and mortgage lending, have abated, but still cast a gloomy tone on the overall job report. The construction sector lost 16,000 employees, bringing the total loss of jobs to 350,000 jobs since the housing market's peak in August 2006. The financial sector added 4,000 jobs, though Prakken says any employment growth has been "very weak."

The Labor Department is set to release monthly reports on jobs and unemployment on Friday. Economists expect them to show a 55,000 drop in nonfarm payrolls, with employment holding steady at 5.5%.

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