Jobs survey shows US unemployment figures beginning to ease

The private sector was still shedding jobs in the US in December, but at the slowest pace since the recession began, according to a survey used as a precursor to the official unemployment figures out tomorrow.

And a separate survey showed that the decline in service sector jobs had also abated, although not as much as hoped.

The latest data is being pored over by economists concerned that stubbornly high unemployment in the world's largest economy could eventually derail the recovery.

The bigger picture will be pieced together over the coming months, when it will become clear if government efforts to stimulate the economy have sparked a real return of confidence among employers following the worst slowdown since World War II.

Consulting firm ADP said the US private sector shed 84,000 jobs last month, the smallest number since March 2008. The November figure of 169,000 job losses was also revised lower, to 145,000, with each figure coming out better than the consensus of Wall St forecasts.

The Institute for Supply Management published the latest index of service sector activity, which was 50.1, up from 48.7 for November but shy of economists' forecasts of 50.5.

Any reading above 50 represents expansion, meaning that the service sector - the largest part of the US economy - grew for only the second month out of the past 16. An important component of the ISM survey, the service-sector employment index, showed a reading of 44.0, better than the 41.6 of November.

It has been showing readings below 50 for two years.

The four industry groups actually adding jobs were retail, finance and insurance, public administration and what is called other services.

Dan Greenhaus, chief economic strategist at Miller Tabak, said there was a worrying distinction between the manufacturing and non-manufacturing sectors of the US economy.

"Manufacturing, which is 12 per cent of the economy, has seen a clear, V-shaped recovery in production levels thanks in part to government support and a reduction in inventory drawdowns," he said.

"The service sector though, which is the far more vital part of the economy, has not rebounded as robustly and has been treading water since September."

- INDEPENDENT