Emily Maltby
February 4, 2009

For the 12th consecutive month, small businesses made deep staffing cuts: Companies with 500 or fewer workers cut 430,000 positions in January, according to the latest ADP (ADP, Fortune 500) employment report, released Wednesday.

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Small employers are typically the last to cut jobs and the first to create them, which makes January’s job-loss numbers a worrying omen for the rest of the year. Joel Prakken, chairman of ADP’s research partner, Macroeconomic Advisers, doesn’t expect improvement any time soon.

“We believe that for the first half of this year, the economy will continue to contract,” he said. “There may be growth in the second half, but it will be sluggish.”

More than one year into the ongoing recession, business owners say they’re running out of options for cutting costs.

“The last thing we want to do is lay off,” said Nan Gehlen, who runs aluminum boat manufacturing company Ottercraft in Kingston, Wash. “We make a lot of sacrifices to preserve our work force, to give them high salaries and good benefits.”

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