ADP Report Shows Another Month of Large Job Losses

Businesses in the U.S. cut 522,000 jobs in January, according to a report released Wednesday by payroll processor ADP.

The ADP report, issued two days in advance of the official Labor Department employment situation report, covers only private businesses in the U.S.

Analysts and economists polled by Bloomberg and MarketWatch had predicted an average of 540,000 jobs lost in the ADP report. ADP revised its December report to reflect 659,000 jobs lost in the final month of 2008.

ADP revised its methodology late last year to help limit differences between its calculations and the government’s payrolls numbers. Economists are now predicting that the Labor Department report on Friday will show that a total of 525,000 non-farm jobs were lost in January and the unemployment rate will be revised up to 7.5 percent from the current 7.2 percent. In December, Labor said that 632,000 jobs were lost.

Friday’s report is expected to show the fifth straight month of jobs losses of over 400,000. The economy shed a total of 2.6 million jobs in 2008, the most since 1945.

The unemployment rate is the most important economic predictor of collection and recovery rates for accounts receivable management firms. In insideARM’s Credit & Debt Collection Confidence Survey for the fourth quarter of 2008, collection agency respondents ranked unemployment as the most significant factor on recovery rates, with more than 35 percent of participants saying it has a “Major impact” on collections.