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Economy in Brief

ADP Report: Moderate Job Growth Continues
by Tom Moeller June 3, 2010

Employment gains continued last month. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payroll levels rose in May by 55,000. The increase followed upwardly revised gains during the prior two months and was the fourth consecutive monthly rise.

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 May payroll employment tomorrow. As a comparison, the April increase of 65,000 in ADP's measure of private nonfarm payrolls was accompanied by a rise of 231,000 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 private service-producing industry employment rose for the fourth  consecutive month with a gain of 78,000 (-0.5% y/y). Small-sized payrolls grew 37,000 (-0.3% y/y) while medium-sized payrolls grew 37,000 (-0.5% y/y). These increases were accompanied by a modest 4,000 gain (-1.2% y/y) in large service producing payrolls.

Goods producing employment fell another 23,000 during May though the three-month change eased to -1.4% (AR) versus -15.8% one year ago. In the manufacturing sector alone, however, payrolls rose 15,000 (-3.7% y/y) for the fourth consecutive monthly rise. Large goods producing payrolls slipped 1,000 (-6.3% y/y) while small-sized payrolls fell 24,000 (-7.5% y/y). New figures provided for construction employment indicated a moderating decline of 41,000 jobs. The greatest drop, 120,000, was logged during March of 2009. Financial activities jobs rose 5,000.

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.

ADP National Employment Report May April March Y/Y 2009 2008 2007
Total Nonfarm Private Payroll Employment (m/m Chg., 000s) 55 65 32 -1.5% -4.9% -0.7% 1.1%
   Small Payroll (1-49) 13 18 8 -1.3 -4.1 -0.1 1.8
   Medium Payroll (50-499) 39 31 19 -1.4 -5.7 -0.9 1.0
   Large Payroll (>500) 3 16 5 -2.2 -5.6 -1.8 -0.2
   Goods Producing -23 -10 -28 -6.2 -12.3 -3.7 -1.1
     Manufacturing 15 31 7 -3.7 -11.1 -3.0 -1.7
   Service Producing 78 75 60 -0.5 -3.3 0.0 1.7
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