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Economy in Brief

ADP Report: Payroll Employment Fell Again By 250,000
by Tom Moeller December 3, 2008

The payroll processor ADP indicated in its latest National Employment Report that October private nonfarm payrolls fell 250,000 after a revised 179,000 October shortfall that was deeper than the initial estimate. The latest was the fifth decline in the last six months and it was the largest since November 2001. During the last three months payrolls have fallen 0.4%.

The U.S. Bureau of Labor Statistics will report on November payroll employment this Friday. Last month, the 179,000 worker decline in ADP's measure of private nonfarm payrolls was accompanied by a 263,000 (-1.1% y/y) worker decline in the BLS measure of private sector payrolls.

According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.

By the ADP measure, goods producing payrolls fell by 158,000 (-4.0% y/y). The largest decline was amongst medium sized payrolls which fell 79,000 (-4.3% y/y) followed by a 47,000 (-2.6% y/y) drop in small sized payrolls. Large payrolls fell 32,000 (-5.8% y/y).

Employment in the manufacturing sector fell 118,000 (-4.2% y/y) It has fallen in each month since late-2005.

Employment in the service producing industry added to the weakness in the goods producing sector. Payrolls fell 92,000 (+0.5% y/y), the first decline since 2001. Small service producing payrolls fell 32,000 (+1.1% y/y). Medium sized payrolls fell 51,000 (+0.3% y/y) and large service producing payrolls dropped by 9,000 (-0.6% y/y).

ADP compiled the estimate from its database of individual companies' payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.

The ADP National Employment Report data is maintained in Haver's

USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months.

The full ADP National Employment Report can be found here, and the ADP methodology is explained here.

LAXEPA@USECON November October Y/Y 2007 2006 2005
Nonfarm Private Payroll Employment (m/m Chg.) -250,000 -179,000 -0.3% 1.1% 1.7% 1.8%
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