Unemployment levels fall as economy picks up

Employment on the rise

Estimates have shown that the American service sector recorded a net gain of 12,000 jobs for December 2009, marking the largest increase since January 2008. Analysts believe the increase points to more signs of economic recovery.

The report comes courtesy of the Automatic Data Processing's (ADP) National Employment Report and estimates that the rise has partially offset the continued loss of jobs across private sector manufacturing companies. In fact, the data shows that non-farm employment decreased by 84,000 jobs last month.

Good news

The report marks a significant uptick for the employment market, which is bound to be an encouragement for many HR managers that have been battling against the tide of massive unemployment levels.

According to analysts, the figure was mid-way between the 73,000 and the 90,000 that had been expected and followed strong manufacturing data and disappointing construction figures from earlier this week which has left markets unmoved.

Reports also showed that the data indicated that job losses in November were less than previously thought, declining by 145,000, some 24,000 less than the original estimate published last month.

"Undershot"

However, despite the potential good news, Ian Shepherdson, chief US economist at High Frequency Economics told British newspaper The Times that the "ADP figures have persistently undershot the official numbers in recent months."

He cautioned that construction employment specifically had dropped by 52,000 jobs, marking its thirty-fifth consecutive monthly decline, and brings the total decline in construction jobs since the peak in January 2007 to 1.8 million.

What's more, while these estimates are based on information from 360,000 US businesses representing more than 22 million employees, official December figures, released by the US government's Labor Department report, will be released on Friday and is likely to give a clearer picture on the state of unemployment across the country.

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