Where's the Jobs? Send Out The Bloodhounds!

The pace of layoffs continued to slow in September as the private sector shed fewer jobs than the previous month, setting the stage for more job losses Friday.

Meanwhile, gross domestic product decreased at a 0.7% annual rate in the second quarter, better than the 1.0% decline previously estimated, the Commerce Department said Wednesday. It's a welcome improvement over GDP's 6.4% decline in the first quarter.

Private nonfarm payrolls fell by 254,000 in September, down from a revised 277,000 drop in August, according to a report by Automatic Data Processing Inc. and forecasting firm Macroeconomic Advisers released Wednesday.


"It's obviously a little worse than expected, but the broader theme is that the labor market is getting less worse. It's very difficult to draw any conclusions for Friday's number because of this," said Dan Greenhaus, analyst at Miller Tabak & Co in New York, referring to the government's monthly non-farm payrolls report on Friday.

"Given the uncertainty surrounding job creation, there's only so much we can read into it, but in any event, 254,000 private sector jobs lost in a month remains a very poor reading."The ADP and Macroeconomic Advisers said its National Employment Report is designed as a proxy of the non-farm payrolls report.

The U.S. Labor Department will release its September payroll figures at 8:30 a.m. on Friday, which are more comprehensive because they include both the private and public sectors.

It is expected to show the labor market's rate of deterioration slowing, with analysts forecasting a loss of 180,000 jobs in September versus 216,000 in August.

However, the unemployment rate is expected to rise to a 26-year high of 9.8 percent from 9.7 percent the previous month.