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Economy in Brief

ADP Report:U.S. December Payroll Employment Decline Is Smallest Since March 2008
by Tom Moeller January 6, 2010

Though private sector payrolls fell again last month, the 84,000 worker decline was the least since March 2008. The latest report from the payroll processor ADP, in their National Employment Report, indicated that the December decline in private nonfarm payrolls followed a 145,000 November drop that was less than initially reported. The latest reading was the twenty-third consecutive monthly decline. For 2009 as a whole payrolls fell by 4.4% which was the sharpest in the series' brief eight year history.

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 December payroll employment this Friday. For comparison, the November decline of 145,000 in ADP's measure of private nonfarm payrolls was accompanied by a loss of 18,000 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 service-producing industry employment ended last month with a gain of 12,000 (-2.5% y/y). It was the first rise since March of 2008. Small-sized payrolls grew 11,000 (-2.1% y/y) while medium-sized payrolls rose 10,000 (-2.7% y/y). These increases were offset by a 9,000 decline (-2.8% y/y) in large service producing payrolls.

In the goods producing sector employment fell 96,000 during December (-12.0% y/y) and that was deeper than the November drop. Nevertheless, the three-month annual rate of decline eased again to -6.4% versus -17.3% at its worst last March. Small-sized payrolls fell 36,000 (-11.9% y/y), about the same as a 35,000 drop (-11.7% y/y) in medium-sized payrolls. Large payrolls fell 25,000 (-12.7% y/y). In the manufacturing sector alone, payrolls fell 43,000 (-11.0% y/y). That was about the same as the November decline but the three-month change moderated to -4.9% from -17.4% last March.

 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. The full ADP National Employment Report can be found here and the ADP methodology is explained here. Earnings Losses of Job Losers During the 2001 Economic Downturn from the Federal Reserve Bank of Philadelphia can be found here. 
ADP National Employment Report December November October Y/Y 2009 2008 2007
Total Nonfarm Private Payroll Employment (m/m Chg., 000s) -84 -145 -178 -4.2% -4.4% -0.5% 1.2%
   Small Payroll (1-49) -25 -59 -69 -3.6 -3.8 -0.0 1.6
   Medium Payroll (50-499) -25 -44 -65 -4.5 -5.0 -0.5 1.2
   Large Payroll (>500) -34 -42 -44 -5.0 -5.1 -1.6 -0.1

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