WASHINGTON (MarketWatch) -- U.S. private-sector firms cut 697,000 jobs in February, according to the ADP employment index, which is based on millions of company payroll records. The lost is the largest ever in the ADP index, which dates back to 2001. January's loss was revised sharply lower to 614,000 from 522,000 reported a month ago. The ADP index released Wednesday showed the goods-producing sector shed 338,000 jobs, the 26th consecutive decline. Manufacturing lost 219,000, whle construction lost 114,000. The services sector lost 359,000 jobs. The index does not include government jobs. Adding in the typical 12,000 jobs gained in the public sector, the ADP report points to nonfarm payrolls falling by 685,000, compared with the MarketWatch consensus of 640,000. See Economic Calendar. "The recession has spread aggressively to small-size businesses," said Joel Prakken, chairman of Macroeconomics Advisers, the economic consulting firm that computes the ADP index from anonymous payroll data provided by ADP. Small-busineses (those with less than 50 employees) cut 262,000 jobs in February. Large businesses (with more than 500 employees) cut 121,000 jobs, while medium-sized businesses cut 314,000. The index is computed by Macroeconomic Advisers using anonymous payroll data collected by ADP. Automatic Data Processing Inc. provides payroll and human-resources services to about one in every six U.S. workers, serving more than 500 companies. The ADP sample is taken during the same week of the month as the government's survey, using similar methods.

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