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Economy in Brief

ADP Report: U.S. Payroll Employment Decline Moderates Further
by Tom Moeller December 1, 2009

Payroll employment fell again last month, but the rate of decline slowed further. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payrolls fell 169,000 during November. That followed a revised 195,000 October decline which was shallower than reported initially. The latest reading was the twenty-second consecutive monthly decline. The monthly drop, however, was the smallest decline since July of last year and three-quarters the size of the worst reading last March. The three-month annualized rate of decline in payrolls also eased to 2.1% from its March record of 7.1%.

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 November payroll employment this Friday. For comparison, the October decline of 195,000 in ADP's measure of private nonfarm payrolls was accompanied by a loss of 190,000 jobs 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 the decline in small-sized payrolls moderated to 68,000 (-4.1% y/y). Medium-sized payrolls fell 57,000 (-5.1% y/y) and large payrolls fell by 44,000 (-5.3% y/y). The decline in service-producing industry employment continued. The November drop of 81,000 (-2.9% y/y) was the twenty-first consecutive monthly decline but in percentage terms the three-month rate of change moderated to -1.1%, less than three-quarters, the worst from January through March. The decline in medium-sized service payrolls amounted to 30,000 (-3.2% y/y) and small-sized payrolls declined 32,000 (-2.6% y/y). Large service producing payrolls decreased 19,000 and the y/y decline eased slightly to -3.2%.

In the goods producing sector employment fell 88,000 during November (-12.6% y/y) but the October decline was revised shallower. Here, the three-month rate of decline eased again to -7.3% versus -17.3% at its worst. Small-sized payrolls fell 36,000 (-12.4% y/y) followed by a 27,000 (-12.6% y/y) drop in medium-sized payrolls. Large payrolls fell 25,000 (-13.0% y/y). In the manufacturing sector alone, payrolls fell 44,000 (-11.8% y/y) but the three-month change moderated to -5.8% from -17.4% at its worst.

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.

The Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output as of September 2009 from the Congressional Budget Office can be found here.

ADP National Employment Report November October September Y/Y 2008 2007 2006
Total Nonfarm Private PayrollEmployment (m/m Chg., 000s) -169 -195 -220 -4.7% -0.5% 1.2% 2.0%
   Small Payroll (1-49) -68 -77 -88 -4.1 -0.0 1.6 2.2
   Medium Payroll (50-499) -57 -70 -78 -5.1 -0.5 1.2 1.9
   Large Payroll (>500) -44 -48 -54 -5.3 -1.6 -0.1 0.4
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