America's private employers cut more than half a million workers in December alone, raising fears that Government figures out on Friday will show the most savage job cuts in almost 60 years.

Data from ADP Employer Services are usually more optimistic than official figures due out on Friday from the US Government.

However, following today's shock figures, which revealed that 693,000 people lost their jobs in the run up to Christmas, economists now expect Friday's payrolll figures to show that more than 700,000 people lost their jobs last month.

Investors sent the Dow Jones industrial average down 185.82 points to 8,829.28 following the surprise rise in unemployment.

Ian Shepherdson, chief US economist at High Frequency Economics, described the ADP announcement as "shockingly awful". Analysts and economists had expected about 500,000 job losses in December.

Mr Shepherson said: "If the recent relationship between the ADP numbers and the official payroll data holds, then we should expect a number of about -700,000 on Friday, the biggest drop in 59 years."

ADP said that private employers cut 476,000 jobs in November.

The company said that it used new methodology for its December numbers so that they more closely predicted the outcome of the Government's non-farm payrolls report, which follows within days.

But Mr Shepherdson said that, even if the new methodology was effective, the Government was still likely to report about 568,000 job cuts.

"We await Friday with trepidation," he said.

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