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Economy in Brief

ADP Indicates Slower Job Growth
by Tom Moeller February 1, 2012

Job growth is continuing at a moderate pace. Private nonfarm payrolls rose 170,000 last month after a 292,000 December increase which was revised down from 325,000 reported last month. The figures come from the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers. The latest increase was less than Consensus expectations for a 180,000 gain. The recent monthly increases left three-month growth at 2.5% (AR).

The U.S. Bureau of Labor Statistics will report January payroll employment on Friday. Economists expect a 155,000 worker increase in jobs. By comparison, the December increase of 292,000 in ADP's measure of private nonfarm payrolls was accompanied by a 212,000 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 continued to lead improvement in the job market. Its 152,000 worker gain (1.9% y/y) contrasted to an 18,000 increase (1.2% y/y) in goods-producing payrolls while factory sector jobs rose 10,000 (0.9% y/y). Overall, small-sized payrolls again showed the most improvement with a 95,000 (2.0% y/y) gain. Medium-sized payrolls followed with a 72,000 (2.0% y/y) increase while large payrolls grew just 3,000 (0.6% y/y). Construction employment ticked up 2,000 and the number of financial activities jobs rose 9,000.

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.

Why Is Unemployment Duration So Long? from the Federal Reserve Bank of San Francisco is available here.

ADP National Employment Report Jan Dec Nov Y/Y 2011 2010 2009
Nonfarm Private Payroll Employment (m/m Chg., 000s) 170 292 209 1.8% 1.4% -1.1% -4.8%
 Small Payroll (1-49) 95 136 111 2.0 1.6 -0.8 -3.9
 Medium Payroll (50-499) 72 126 85 2.0 1.8 -1.0 -5.6
 Large Payroll (>500) 3 30 13 0.6 0.2 -2.0 -5.6
Goods Producing 18 51 28 1.2 0.7 -5.1 -12.3
  Manufacturing 10 20 5 0.9 1.2 -3.3 -11.3
Service Producing 152 241 181 1.9 1.6 -0.2 -3.1
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