Unemployment Picture Improves

NEW YORK ( TheStreet) -- Amid a struggling jobs market, two separate readings released Wednesday offered some glimmers of hope ahead of Friday's highly anticipated government jobs report.

In one assessment, private sector employers shed a seasonally adjusted 20,000 jobs between January and February. The figure from Automatic Data Processing represented the smallest drop in two years. The dip also landed in line with consensus expectations, according to Briefing.com.

While analysts worried that recent bad winter weather would muddy economic results this month, the ADP report said weather had only a minor effect on its figures. The report also said weather factors are expected to weigh on Friday's Labor Department report, yet also help March numbers.

The service sector gained 17,000 jobs last month. The manufacturing realm showed employment growth for the first time since January 2008, as 3,000 jobs were added in that sector.

But the report also noted some discouraging trends. The goods-producing sector lost 37,000 jobs during the month. Even more, overall job losses in the prior month were revised to show an even steeper drop, declining by 60,000 jobs instead of the originally reported 22,000 jobs.

A separate report also showed announced job cuts fell to their lowest level in nearly four years. Challenger, Gray & Christmas said employers planned to reduce their payrolls by 42,090 last month, down 41% from January and 77% from the year before, representing the smallest number of planned layoffs since July 2006.

"Most economists agree that a recovery is well underway; a position that appears to be supported by declining job-cut activity," John Challenger, CEO of Challenger, Gray & Christmas, said in a release. "It may be a couple of more months before hiring begins to surge, but it is clear that employers have shifted away from downsizing and are poised to start adding workers."

The group highlighted several recent announcements, including one from Merck ( MRK) after it bought Schering-Plough. Oracle ( ORCL) said it would slash 1,000 jobs after it bought Sun Microsystems, but those plans were buffered by a subsequent announcement to add 2,000 jobs in the coming months.

The Friday government jobs report is expected to show another 20,000 jobs shed from nonfarm payrolls, with the unemployment rate edging a tenth of a percentage point higher to 9.8%.

-- Written by Sung Moss in New York

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