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Economy in Brief

ADP Reports Labor Market Healing
by Tom Moeller  July 7, 2011

The labor market improved last month after being hit by a tsunami and floods. In its latest National Employment Report, the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers, indicated that the June level of private nonfarm payrolls rose 157,000 after a depressed 36,000 May increase, revised from 38,000. The latest gain was stronger than Action Economics' expectation for a 78,000 increase. Nevertheless, the three-month rate of growth fell to 1.4% (AR) versus the February peak of 2.4%.

The U.S. Bureau of Labor Statistics will report June payroll employment tomorrow. Economists expect a 90,000 worker increase in jobs. For comparison, the May increase of 36,000 in ADP's measure of private nonfarm payrolls was accompanied by an 83,000 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.

Improved m/m job growth was logged for June in all of the ADP categories. However, a 130,000 gain in service-producing payrolls still was down moderately from earlier monthly increases. Goods-producing payrolls also improved by 27,000 but that also was slightly less than earlier gains. Factory sector jobs rose 24,000. Overall, small-sized payrolls grew 88,000 m/m (1.7% y/y) while medium-sized payrolls rose 59,000 (1.8% y/y). Large payrolls rebounded by 10,000 (0.1% y/y). Construction employment fell 4,000 and the number of financial activities jobs slipped 3,000.

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 ADP methodology is explained here. The expectations figures are available in Haver's AS1REPNA database.

ADP National Employment Report Jun May Apr Y/Y 2010 2009 2008
Nonfarm Private Payroll Employment (m/m Chg., 000s) 157 36 188 1.5% -1.1% -4.8% -0.6%
  Small Payroll (1-49) 88 27 88 1.7 -0.8 -3.9 0.0
  Medium Payroll (50-499) 59 30 89 1.8 -1.0 -5.6 -0.9
  Large Payroll (>500) 10 -21 11 0.1 -2.0 -5.6 -1.9
Goods Producing 27 -10 39 0.7 -5.1 -12.3 -3.6
  Manufacturing 24 -10 22 1.3 -3.3 -11.3 -3.2
Service Producing 130 46 149 1.6 -0.2 -3.1 0.1
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