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Economy in Brief

ADP Report: Rate Of Job Loss Moderates
by Tom Moeller June 3, 2009

No doubt the job market has yet to materially improve. However, the latest report from the payroll processor ADP in their National Employment Report showed an easing in the rate of contraction. It indicated that private nonfarm payrolls fell 532,000 last month after a revised 545,000 decline during April. (Recent months' declines were revised deeper from the earlier estimates.) The latest reading was the sixteenth consecutive monthly decline, but the annualized rate of decline in payrolls eased somewhat to 6.3% during the last three months.

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 U.S. Bureau of Labor Statistics will report payroll employment this Friday. For comparison, April's 545,000 worker decline in ADP's measure of private nonfarm payrolls was accompanied by 611,000 job losses 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.

ADP reported that last month medium-sized payrolls fell 223,000 (-5.3% y/y) followed by a 209,000 (-4.0% y/y) worker decline in small sized payrolls. Large payrolls fell by 100,000 (-5.3% y/y). In the goods producing sector there were 267,000 fewer jobs in April (-12.0% y/y). Medium-sized payrolls fell 114,000 (-12.5% y/y) followed by a 98,000 (-11.4% y/y) shortfall in small-sized payrolls. Large payrolls fell 55,000 (-12.1% y/y). In the manufacturing sector alone, payrolls fell 149,000 (-11.8% y/y) and that rate of decline has been gaining steam.

Declines in employment in the service producing industry have lagged just slightly the factory sector's workforce contraction. The 265,000 (-3.1% y/y) decline last month was the fourteenth consecutive monthly decline. Medium-sized service payrolls fell 109,000 (-3.4% y/y) and small-sized payrolls were off 111,000 (-2.7% y/y). Large service producing payrolls dropped by 45,000 (-3.3% y/y).

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 May April Y/Y 2008 2007 2006
Nonfarm Private Payroll Employment (m/m Chg.) -532,000 -545,000 -4.8% -0.4 1.2% 2.0%
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