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Economy in Brief

ADP Reports Further Weakening of the Labor Market
by Tom Moeller  August 31, 2011

Employment growth continued to sputter last month according to the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers. The August gain in private nonfarm payrolls of 91,000 followed a 109,000 July increase, revised from 114,000. The latest fell short of expectations for a 100,000 rise. As a result of the recent small monthly increases, the three-month rate of growth of 1.3% (AR) remained down from February's 2.4%.

The U.S. Bureau of Labor Statistics will report August payroll employment this Friday. Economists expect a 93,000 worker increase in jobs. For comparison, the July increase of 109,000 in ADP's measure of private nonfarm payrolls was accompanied by a 154,000 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 compiles 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.

An 80,000 increase in service-producing payrolls again provided most of the growth in the latest ADP estimate. Goods-producing payrolls rose 11,000. Factory sector jobs slipped 4,000. Overall, small-sized payrolls grew 58,000 m/m (1.7% y/y) while medium-sized payrolls rose 30,000 (1.8% y/y). Large payrolls rose a reduced 3,000 (0.3% y/y). Construction employment rose 7,000 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. The expectations figures are available in Haver's AS1REPNA database.

ADP National Employment Report Aug Jul Jun Y/Y 2010 2009 2008
Nonfarm Private Payroll Employment (m/m Chg., 000s) 91 109 144 1.5% -1.1% -4.8% -0.6%
 Small Payroll (1-49) 58 59 79 1.7 -0.8 -3.9 0.0
 Medium Payroll (50-499) 30 41 58 1.8 -1.0 -5.6 -0.9
 Large Payroll (>500) 3 9 7 0.3 -2.0 -5.6 -1.9
Goods Producing 11 -2 25 0.9 -5.1 -12.3 -3.6
  Manufacturing -4 -2 22 1.3 -3.3 -11.3 -3.2
Service Producing 80 111 119 1.6 -0.2 -3.1 0.1
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