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Economy in Brief

ADP Reports Continued Firm Job Growth
by Tom Moeller  March 2, 2011

The corner clearly has been turned in the job market. In its latest National Employment Report, the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers, indicated that the February level of private nonfarm payrolls rose another 217,000 m/m after a 189,000 January increase, last month reported as 187,000. The latest gain exceeded Consensus expectations for a 170,000 increase. Earlier figures were slightly revised due to new seasonal factors.

The U.S. Bureau of Labor Statistics will report February payroll employment on Friday. Economists expect a 190,000 worker increase in jobs. For comparison, the January increase of 189,000 in ADP's measure of private nonfarm payrolls was accompanied by a 50,000 rise in the BLS measure of private sector jobs. 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.

Another firm gain in private service producing payrolls of 202,000 was the greatest source of strength in the ADP report. It was the fourteenth consecutive monthly increase. Goods producing payrolls rose for the fourth month. The 15,000 increase was due to a 20,000 rise in factory sector jobs. Overall, small-sized payrolls grew 100,000 m/m (1.3% y/y) while medium-sized payrolls rose 104,000 (1.5% y/y). Large payrolls showed the weakest gain, up 13,000 (0.1% y/y). Construction employment slipped by 9,000 and the number of financial activities jobs was unchanged.

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 ADP methodology is explained here.

ADP National Employment Report Feb Jan Dec Y/Y 2010 2009 2008
Nonfarm Private Payroll Employment (m/m Chg., 000s) 217 189 246 1.2% -1.1% -4.8% -0.6%
Small Payroll (1-49) 100 101 101 1.3 -0.8 -3.9 0.0
Medium Payroll (50-499) 104 85 127 1.5 -1.0 -5.6 -0.9
Large Payroll (>500) 13 3 18 0.1 -2.0 -5.6 -1.9
Goods Producing 15 23 26 0.1 -5.1 -12.3 -3.6
  Manufacturing 20 24 29 1.2 -3.3 -11.3 -3.2
Service Producing 202 166 220 1.4 -0.2 -3.1 0.1
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