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Economy in Brief

ADP Report Points to 57K Private Payroll Growth for February; Survey Revised, Series Added on Sector and Firm-Size
by Carol Stone March 7, 2007

The ADP National Employment Report for February points to a 57,000 increase in private nonfarm payrolls. This measure is intended as a leading indicator for the "official" BLS data to be reported Friday, March 9. For January, the ADP figure was 121,000, with the actual coming at 97,000.

With the annual revision of the BLS data, ADP has also revised its figures and made methodological changes in the calculations. ADP, you perhaps know, processes payrolls for millions of American workers; indeed, their annual report says they cover 1 in 6 private sector workers. Initially their calculation was based on a sample of their own clients covering about 7 million workers. They have expanded this to a substantial portion of their entire base, with data collection weekly not just once a month. New efforts are being made to align both the totals and a broad industry breakdown every month. The seasonal adjustment process was shifted from X-11 to X-12 ARIMA, and closer examination is being made for outliers. These changes are aimed at minimizing the production of false signals in the report: for example, in December, the original series pointed to a decline in private sector jobs of 40,000, but the BLS figure showed an increase of 150,000.

The Report also contains new information. It shows a breakdown for goods-producing and service-producing sectors, with employment in goods industries presently seen declining 43,000 in February and services going up 100,000. Brand-new series are available on the size of payroll units. Since most business growth has occurred in small- and medium-sized firms, this would be useful in assessing the breadth of payroll changes. So for February, the ADP data show a 53,000 gain at small businesses (49 or fewer employees), 33,000 at medium-sized companies (50-499) and a decline of 29,000 at large firms (500 and over). It's easy to focus on large businesses because they get more public attention, but in fact, it's the smaller ones where there is more dynamism.

Monthly Averages
Private Nonfarm Payrolls (000s) Feb 2007 Jan 2007 Dec 2006 Nov 2006
2006 2005 2004
ADP Total 115,111 115,054 114,933 114,815 114,165 112,288 110,290
  Change 57 121 118 258 142 171 153
BLS Total -- 115137 115040 114835 114186 111890 109804
  Change -- 97 205 190 167 198 159
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