U.S. private sector cut 298,000 jobs in August 2009

However, the payroll report suggests a slight improvement in the battered U.S. labor market. Last July, 360,000 jobs were lost.

Despite the slight improvement, the figure was worse than expected by analysts. The ADP report comes two days before the Labor Department will give its unemployment rates. It is expected that the August unemployment will reach to 9.5 percent.

U.S. markets reacted negatively on the payroll cuts news. However, at this time it is not known if the current market volatility is one of those things that investors slow down on a bad news or is really related to consumer spending.

Investors may be cautious that the consumer spending is slowing down may be slow in the coming months. Consumer spending amounts to 70 percent of the U.S. economy.

On a positive side "U.S. worker productivity rose in the second quarter at the fastest pace in almost six years as companies squeezed more out of remaining staff to boost profits. Productivity, a measure of employee output per hour, rose at a 6.6 percent annual rate, the most since the third quarter of 2003, revised figures from the Labor Department showed today in Washington. Labor costs fell by the most in nine years," Bloomberg reports.

Written by Armen Hareyan
Materials from Bloomberg and Diario Financiero Online are used in this report.