WRAPUP 3-US private job losses decline, outlook improves

* Private employers cut 22,000 jobs, fewest since Feb 2008

* Hopes rise for positive payrolls report on Friday

* Service sector activity expands slightly in January

* Demand for U.S. home loans hits six-week high
(Recasts; adds details about payrolls report, Obama, comment)

By Steven C. Johnson

NEW YORK, Feb 3 (BestGrowthStock) – With jobs at the top of the
U.S. political agenda, private employers reported the smallest
payroll decline in nearly two years in January while the vast
U.S. services sector grew slightly, data showed on Wednesday.

Signs that the pace of job losses is slowing could ease
pressure on the Obama administration as it seeks to regain
momentum ahead of Friday’s more comprehensive nonfarm payrolls
report, expected to show the economy added jobs last month.

Obama is at pains to show evidence that his
administration’s policies will generate jobs and reduce the
country’s 10 percent unemployment rate, especially in an
election year in which his Democratic Party is attempting to
defend majorities in both houses of the U.S. Congress.

After focusing on health-care reform last year, Obama has
spent more time of late talking about job creation,
particularly as public anger about job losses rises and as
Republicans won a Massachusetts Senate seat that had been in
Democratic hands for decades.

“A positive payrolls report may be just what’s needed to
spur a stock market rally. It will be positive for Main Street,
for Wall Street and for Pennsylvania Avenue,” said Michael
Woolfolk, currency strategist at BNY Mellon in New York.

A report Wednesday by ADP Employer Services showed the
United States lost 22,000 private sector jobs last month,
smaller than the 61,000 jobs lost in December and below
economists’ forecasts of 30,000 jobs lost in January.

January’s tally was the lowest since February 2008,
according to the ADP report, developed jointly with
Macroeconomic Advisers LLC.

“The trend continues to get less worse. This is consistent
with job growth returning in the United States,” said Dave
Sloan, senior economist at 4Cast Ltd in New York. “I do believe
the U.S. economy is now strong enough to create jobs.”

On Wall Street, U.S. stocks (Read more about the stock market today. ) mostly edged lower on
Wednesday, as disappointing results from drug maker Pfizer Inc
(PFE.N: ) chilled earlier enthusiasm for the economic data. But
government bond prices fell in anticipation of a strong jobs
report.

Economists polled by Reuters expect the government jobs
report on Friday to show the economy added 5,000 jobs last
month after shedding 85,000 in December.

According to the 20 most accurate forecasts, the median
estimate is for a gain of 8,000 jobs, which would mark only the
second monthly payroll gain since the recession began in 2007.

SERVICES SECTOR GROWS, MORTGAGE DEMAND UP

Also on Wednesday, the Institute for Supply Management said
its index of the vast U.S. services sector rose to 50.5 last
month from a reading of 49.8 in December. That was a touch
below economists’ expectation, but slightly above the 50 level
that indicates expansion. For details, see [ID:nN03361980]

Yet, job growth in the services sector, which accounts for
the majority of U.S. employment, remained negative.

“We are not at the point where service sector jobs are
being created,” said Gary Thayer, chief macrostrategist at
Wells Fargo Advisors in St. Louis.

A report from consultancy Challenger, Gray & Christmas, Inc
showed planned layoffs at U.S. companies rose to a five-month
high in January. Cuts were concentrated in retail, which the
firm said tends to struggle in January, one of the slowest
months of the year. [ID:nNYS007746]

But John Challenger, chief executive of Challenger, Gray &
Christmas, said the news “is not necessarily a sign of a
recession relapse,” adding: “it is not uncommon to see a surge
in job-cut announcements to begin the year.”

A separate Mortgage Bankers Association report showed
demand for home loans jumped 21 percent to a six-week high last
week as borrowers scrambled to lock in mortgage rates ahead of
an expected increase. [ID:nNYS007747]

Some economists expect stronger U.S. growth and the end of
various emergency central bank lending and asset purchase
programs will put upward pressure on 30-year mortgage rates.

Data last week showed the U.S. economy grew at a 5.7
percent annual rate in the fourth quarter of 2009, after
growing by a more modest 2.2 percent in the third quarter.

The outlook for the housing market remains uncertain.
Recent data showing a December rise in pending home sales,
which are based on signed contracts, after a steep decline the
prior month, suggest a rebound would come in fits and starts.

But on the employment front, Marcroeconomic Advisers
Chairman Joel Prakken said the ADP report’s February edition,
due next month, is likely to show employers added jobs.

“The climate has really improved quite dramatically,” he
said. “I actually do expect that when we meet next month to
discuss the (ADP) report for February’s data that we’ll be
talking about an overall number that actually is positive.”

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WRAPUP 3-US private job losses decline, outlook improves