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Economy in Brief

ADP Report Indicates Hiring Slowdown
by Tom Moeller  May 2, 2012

Job growth hit a soft-spot last month. Private sector payrolls rose 119,000 as reported by the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers. A 180,000 gain had been expected. The increase followed a 201,000 rise in March, last month reported as 209,000. During the last three months payrolls rose an average 183,000 per month.

The U.S. Bureau of Labor Statistics will report April payroll employment on Friday. Economists expect a 173,000 worker increase in private sector jobs. By comparison, the March increase of 201,000 in ADP's measure of private nonfarm payrolls was accompanied by a 121,000 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.

Slower growth in payrolls was broad-based during April. Service producing payrolls rose 123,000 (1.8% y/y) following growth as high as 225,000 in December. Goods-producing payrolls fell 4,000 following a March gain of 43,000. Factory sector jobs also fell by 5,000. Overall, small-sized payrolls led last month's job growth with a reduced 58,000 (1.9% y/y) increase. Medium-sized payrolls followed with a 57,000 (1.9% y/y) increase while large payrolls rose just 4,000 (0.6% y/y). Construction employment fell 5,000 following two months of strong increase but the number of financial activities jobs rose an improved 13,000.

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 Apr Mar Feb Y/Y 2011 2010 2009
Nonfarm Private Payroll Employment (m/m Chg., 000s) 119 201 228 1.7% 1.4% -1.0% -4.1%
 Small Payroll (1-49) 58 97 111 1.9 1.4 -0.9 -4.1
 Medium Payroll (50-499) 57 84 95 1.9 1.8 -0.9 -5.7
 Large Payroll (>500) 4 20 22 0.6 0.4 -1.8 -5.6
Goods Producing -4 43 44 1.1 0.8 -4.8 -12.4
  Manufacturing -5 23 24 0.7 1.3 -3.2 -11.4
Service Producing 123 158 184 1.8 1.5 -0.2 -3.2
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