The number of planned layoffs at U.S. firms fell in March, despite continued downsizing in the public sector, a report said on Wednesday.

Employers announced 41,528 planned job cuts this month, down 18 percent from the 50,702 cuts announced in February, according to the report from consultants Challenger, Gray & Christmas, Inc.

The March figure was down 39 percent from a year ago, when 67,611 job cuts were announced, the report said.

Overall, 130,749 job cuts were announced in the first three months of the year, marking the lowest rate of downsizing since 1995, when employers announced 97,716 first-quarter job cuts, Challenger, Gray said.

Announced first-quarter job cuts for 2011 were also down 28 percent compared with the same period of 2010, when there were 181,183 planned cuts, the report said.

Government has led job reduction this year, with 19,099 planned cuts in March -- the highest in 12 months, the report said.

There were 41,929 government job cuts announced in the first three months of 2011 -- a 33 percent drop from the 62,700 government layoffs announced in the first three months of last year.

Despite the decline from last year, it is difficult to be optimistic about the outlook for government workers, Rick Cobb, executive vice president of Challenger, Gray & Christmas, said in a statement. Most cities and states have only just begun to address their massive budget deficits and we have yet to see how budget cutbacks are going to impact workers at the federal level.

Downsizing activity in other sectors appears to be stabilizing, he said.

The sectors that had the heaviest job losses at this point a year ago have seen significantly fewer layoffs, Cobb said.

Downsizing has slowed in the pharmaceutical, auto and telecommunications sectors, compared with a year ago, he said.

The downsizing figures come ahead of the much-anticipated U.S. jobs report, which is due at 8:30 a.m. EDT (1230 GMT) on Friday.

The U.S. economy is expected to have added 200,000 private jobs in March, and slightly fewer jobs overall for non-farm payrolls, according to a Reuters poll. For more, see

(Reporting by Edith Honan; Editing by Dan Grebler)

Unemployment