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Economy in Brief

ADP Report: Rate Of Job Loss Lessens A Bit
by Tom Moeller July 1, 2009

While a turn to positive growth in employment still is not at hand, the June report from the payroll processor ADP in their National Employment Report again showed an easing in the rate of contraction. It indicated that private nonfarm payrolls fell 473,000 last month after a revised 485,000 May decline that was shallower than reported initially. The latest reading was the seventeenth consecutive monthly decline, but the annualized rate of decline in payrolls eased somewhat to 5.2% during the last three months from its peak of 7.1% in March.

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 June payroll employment tomorrow. For comparison, May's 485,000 worker decline in ADP's measure of private nonfarm payrolls was accompanied by 338,000 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 smaller medium-sized payrolls remained in forefront of monthly job loss and fell another 205,000 (-5.6% y/y) followed by a 177,000 (-4.2% y/y) worker decline in small-sized payrolls. Large payrolls fell by 91,000 (-5.5% y/y). In the goods producing sector there were 250,000 fewer jobs in June (-12.7% y/y). Details in the goods sector show that medium-sized payrolls fell 108,000 (-13.2% y/y) followed by a 90,000 (-12.0% y/y) shortfall in small-sized payrolls. Large payrolls fell 52,000 (-12.8% y/y). In the manufacturing sector alone, payrolls fell 146,000 (-12.5% y/y).

Declines in employment in the service producing industry continued to lag just slightly the factory sector's workforce contraction with a 223,000 (-3.1% y/y) decline, the fifteenth consecutive monthly decline. Medium-sized service payrolls fell 97,000 (-3.5% y/y) and small-sized payrolls dropped 87,000 (-2.7% y/y). Large service producing payrolls dropped by 39,000 (-3.4% 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.

[email protected] June May Y/Y 2008 2007 2006
Nonfarm Private Payroll Employment (m/m Chg.) -473,000 -485,000 -4.9% -0.4 1.2% 2.0%

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