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Economy in Brief

ADP Report: Private-Sector Job Growth Slows This Month
by Tom Moeller June 30, 2010

The rate of improvement in the U.S. job market slowed during June. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payroll levels rose last month by 13,000. The gain followed a 57,000 May increase that was revised up from 55,000. Though the latest was the fifth consecutive monthly increase, it was the weakest since February. Also, it confirms reports from the Federal Reserve district banks that job growth slowed last month. A 60,000 increase in June jobs had been the Consensus expectation for June.

The U.S. Bureau of Labor Statistics will report June payroll employment on Friday. For comparison, the May increase of 57,000 in ADP's measure of private nonfarm payrolls was accompanied by a 41,000 rise 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 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.

ADP reported that private service-producing industry employment rose for the fifth consecutive month. The 30,000 rise (-0.3% y/y) was, however, the smallest of the five. Small-sized payrolls grew a diminished 20,000 (-0.1% y/y) while medium-sized payrolls also grew a weaker 13,000 (-0.3% y/y). The 3,000 worker decline (-0.9% y/y) in large service-producing payrolls was the first shortfall since January.

Goods producing employment fell another 17,000 this month (-5.1% y/y). Payrolls have been falling since early-2006 but the latest was near the smallest of the period. At the worst, goods producing employment fell 334,000 in February of last year. In the manufacturing sector alone, however, payrolls rose 16,000 (-2.4% y/y) for the fifth consecutive monthly rise. Large goods producing payrolls increased 6,000 (-4.9% y/y) while small-sized payrolls fell 21,000 (-6.6% y/y). Medium-sized payrolls fell 2,000 (-3.9% y/y). Construction employment fell 35,000. The greatest monthly drop of 120,000 was logged during March of 2009. Financial activities jobs fell 10,000 as they did during May.

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.

Inflation: Noise, Risk, and Expectations from the Federal Reserve Bank of Cleveland can be found here.

ADP National Employment Report June May April Y/Y 2009 2008 2007
Total Nonfarm Private Payroll Employment    (m/m Chg., 000s) 13 57 65 -1.1% -4.9% -0.7% 1.1%
     Small Payroll (1-49) -1 13 17 -1.0 -4.1 -0.1 1.8
     Medium Payroll (50-499) 11 42 31 -1.0 -5.7 -0.9 1.0
     Large Payroll (>500) 3 2 17 -1.7 -5.6 -1.8 -0.2
   Goods Producing -17 -22 -6 -5.1 -12.3 -3.7 -1.1
     Manufacturing 16 18 34 -2.4 -11.1 -3.0 -1.7
   Service Producing 30 79 71 -0.3 -3.3 0.0 1.7
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