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Economy in Brief

ADP Report Shows Job Market Improvement
by Tom Moeller March 7, 2012

The job market continues to improve at a moderate rate. Private nonfarm payrolls rose 216,000 last month after rising 173,000 during January, revised from 170,000 reported last month. Earlier figures were revised due to updated seasonal factors. The figures come from the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers. The latest increase beat Consensus expectations for a 200,000 gain and it left three-month growth at 2.4% (AR).

The U.S. Bureau of Labor Statistics will report February payroll employment on Friday. Economists expect a 235,000 worker increase in private sector jobs. By comparison, the January increase of 173,000 in ADP's measure of private nonfarm payrolls was accompanied by a 257,000 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 improvement in the job market. Its 170,000 worker gain (1.8% y/y) contrasted to an improved 46,000 increase (1.3% y/y) in goods-producing payrolls while factory sector jobs rose 21,000 (1.0% y/y). Overall, small-sized payrolls again showed the greatest improvement with a 108,000 (1.9% y/y) gain. Medium-sized payrolls followed with an 88,000 (2.0% y/y) increase while large payrolls grew 20,000 (0.6% y/y). Construction employment grew 16,,000 and the number of financial activities jobs rose 14,000, the largest gain since 2005.

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 Feb Jan Dec Y/Y 2011 2010 2009
Nonfarm Private Payroll Employment (m/m Chg., 000s) 216 173 267 1.7% 1.4% -1.0% -4.1%
 Small Payroll (1-49) 108 93 123 1.9 1.4 -0.9 -4.1
 Medium Payroll (50-499) 88 76 117 2.0 1.8 -0.9 -5.7
 Large Payroll (>500) 20 4 27 0.6 0.4 -1.8 -5.6
Goods Producing 46 24 42 1.3 0.8 -4.8 -12.4
  Manufacturing 21 16 16 1.0 1.3 -3.2 -11.4
Service Producing 170 149 225 1.8 1.5 -0.2 -3.2
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