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Economy in Brief

ADP Reports Further Strengthening In Job Growth
by Tom Moeller January 5, 2012

Improvement in the job market continued to pick up steam last month. According to the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers, private nonfarm payrolls grew 325,000 (0.3% m/m) during December after a 204,000 rise in November, revised from 206,000. The latest easily beat Consensus expectations for a 175,000 gain. The recent monthly increases pulled three-month growth to 2.5% (AR), roughly the strongest since 2.4% as of February.

The U.S. Bureau of Labor Statistics will report December payroll employment tomorrow. Economists expect a 150,000 worker increase in jobs. By comparison, the November increase of 204,000 in ADP's measure of private nonfarm payrolls was accompanied by a 140,000 gain in the BLS measure of private sector jobs. According to ADP and Macro-Advisers, the correlation between the monthly percentage change in the ADP figure and the BLS data is 0.90. ADP compiles its 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 service sector again led last month's job market improvement with a 273,000 (1.9% y/y) increase in employment. Goods-producing payrolls also rose 52,000 (1.3% y/y) rise while factory sector jobs rose 22,000 (1.1% y/y). Overall, small-sized payrolls showed the most improvement with a 148,000 (2.0% y/y) gain. Medium-sized payrolls followed with a 140,000 (2.0% y/y) increase and large payrolls rose an improved 37,000 (0.6% y/y). Construction employment rose 9,000 but the number of financial activities jobs fell 8,000.

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 Dec Nov Oct Y/Y 2011 2010 2009
Nonfarm Private Payroll Employment (m/m Chg., 000s) 325 204 146 1.8% 1.4% -1.1% -4.8%
 Small Payroll (1-49) 148 109 70 2.0 1.6 -0.8 -3.9
 Medium Payroll (50-499) 140 84 68 2.0 1.8 -1.0 -5.6
 Large Payroll (>500) 37 11 8 0.6 0.2 -2.0 -5.6
Goods Producing 52 28 7 1.3 0.7 -5.1 -12.3
  Manufacturing 22 6 -3 1.1 1.2 -3.3 -11.3
Service Producing 273 176 139 1.9 1.6 -0.2 -3.1
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