May 6 (Bloomberg) -- Companies in the U.S. cut fewer jobs in April, indicating the worst of the recession’s employment losses may have passed, a private report showed today.

Payrolls fell by an estimated 491,000 workers last month, less than economists forecast and the fewest since October, figures from ADP Employer Services today showed. March’s reading was revised to show a reduction of 708,000 workers, down from a previous estimate of 742,000.

Stabilization in consumer spending following the worst slump in three decades is stoking expectations that the recession will end in the second half of the year. Still, a Labor Department report in two days may show employers cut payrolls in April for a 16th consecutive month, pushing job losses in the current downturn to almost 6 million, according to a Bloomberg survey.

“We’re seeing a very clear bottoming pattern,” said John Herrmann, chief economist at Herrmann Forecasting in Summit, New Jersey. “This holds out the possibility that the fiscal stimulus, along with consumers resuming more normal spending patters, will lift the economy into positive growth in the second half.”

Stock rose after the report showed job losses were starting to slow. The Standard & Poor’s 500 index climbed 0.2 percent to 905.84 at 10:35 a.m. in New York. Treasury securities were little changed with the yield on the benchmark 10-year note at 3.17 percent.

Less Than Forecast

The ADP report was forecast to show a decline of 645,000 jobs, according to the median estimate of 28 economists in a Bloomberg News survey. Projections were for decreases ranging from 560,000 to 733,000.

A government report May 8 may show payrolls at companies and government agencies shrank by 610,000 in April and unemployment rose to a 25-year high of 8.9 percent, according to a Bloomberg survey of economists.

Companies are still eliminating staff to bolster profit following the worst slump in consumer spending in three decades. Microsoft Corp., the world’s biggest software maker, last month reaffirmed plans to eliminate as many as 5,000 jobs by the middle of 2010 to help meet its goal of saving $1.5 billion annually in operating expenses.

Goodyear Tire & Rubber Co. said it trimmed 3,800 jobs as part of a plan for 5,000 reductions after posting a smaller- than-forecast first-quarter loss.

Private Employment

The ADP figures comprise only private employment and don’t take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

Government payrolls may show an improvement in April as the Census Bureau began hiring 140,000 workers to help conduct next year’s population count. A total of 1.4 million people will be hired over the next year, many on a part-time basis, to carry out the survey, Census said in March.

Another report today also reflected a weak labor market. Job cuts announced by U.S. employers rose 47 percent in April from a year earlier to 132,590, led by planned cutbacks at government and non-profit agencies and automotive companies, Chicago-based placement firm Challenger, Gray & Christmas Inc. said.

The Federal Reserve projects the U.S. will probably continue to lose jobs even after the economy emerges from the recession, economists said.

“We are likely to see further sizable job losses and increased unemployment in coming months,” Fed Chairman Ben S. Bernanke told congress yesterday. “The unemployment rate could remain high for a time, even after economic growth resumes.”

Smaller Reductions

Today’s ADP report showed a reduction of 262,000 workers in goods-producing industries including manufacturers and construction companies. Employment in manufacturing dropped by 159,000. Service providers cut 229,000 workers.

Companies employing more than 499 workers shrank their workforces by 77,000 jobs. Medium-sized businesses, with 50 to 499 employees, cut 231,000 jobs and small companies decreased payrolls by 183,000.

“There is a sense here of a turn,” Joel Prakken, chairman of Macroeconomic Advisers, said on a conference call with reporters. Still, “one month’s number does not a trend make. I’m still expecting to see several more months of notable decline in employment. There will be some bumps in the road on the way.”

The ADP report is based on data from 400,000 businesses with about 24 million workers on payrolls.

ADP began keeping records in January 2001 and started publishing its numbers in 2006.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

Last Updated: May 6, 2009 10:38 EDT