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Economy in Brief

ADP Report: Payroll Employment Fell Another 522,000
by Tom Moeller February 4, 2009

In its latest National Employment Report, the payroll processor ADP indicated that private nonfarm payrolls fell 522,000 during January after a revised 659,000 decline during December. The decline was the thirteenth consecutive monthly decline and during the last three months, payrolls have fallen at a 5.6% annual rate.

The U.S. Bureau of Labor Statistics will report on December payroll employment this Friday. Last month, the 659,000 worker decline (-2.2% y/y) in ADP's measure of private nonfarm payrolls was accompanied by a 531,000 worker decline (-2.4% y/y) 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.

Employment in the service producing industry again fell hard. The 279,000 (-1.7% y/y) drop was the twelfth consecutive monthly decline. Medium sized payrolls fell 135,000 (-2.1% y/y) and small sized payrolls fell 101,000 (-1.3% y/y). Large service producing payrolls dropped by 43,000 (-2.0% y/y).

Weakness in goods producing payrolls added again to the service sector's decline with a 243,000 (-6.6% y/y) drop. Medium sized payrolls fell 120,000 (-6.8% y/y) followed by a 74,000 (-6.0% y/y) drop in small sized payrolls. Large payrolls fell 49,000 (-7.5% y/y).

Employment in the manufacturing sector fell 160,000 (-6.3% y/y) in January. It has fallen in almost every month since 2001.

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 figures date 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 January December Y/Y 2008 2007 2006
Nonfarm Private Payroll Employment (m/m Chg.) -522,000 -659,000 -2.7% -0.4 1.2% 2.0%
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