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Economy in Brief

ADP Reports Another Sluggish Job Gain
by Tom Moeller  May 31, 2012

While job growth improved slightly during May, this quarter's rise still is sharply reduced versus Q1. Private sector payrolls rose 133,000 as reported by the payroll processor Automatic Data Processing (ADP) and economic consultants Macroeconomic Advisers. A 150,000 gain had been expected. The latest followed a 113,000 rise in April, initially reported as 119,000. The increases follow a 217,000 Q1 average which was boosted by a unseasonably warm winter temperatures.

The U.S. Bureau of Labor Statistics will report May payroll employment tomorrow. Economists expect a 169,000 worker increase in private sector jobs. By comparison, the April increase of 113,000 in ADP's measure of private nonfarm payrolls was accompanied by a 130,000 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.

Payroll growth remained modest this month. Service producing payrolls rose 132,000 (1.9% y/y) following growth as high as 225,000 in December. Goods-producing payrolls ticked up just 1,000 following an April decline of 6,000 and a Q1 average gain of 37,000. Factory sector jobs fell for the second consecutive month. Overall, small-sized payrolls led last month's job growth with 67,000 (2.0% y/y) increase. Medium-sized payrolls followed with a 57,000 (1.9% y/y) increase while large payrolls rose just 9,000 (0.7% y/y). Construction employment slipped 1,000, down for the second consecutive month but the number of financial activities jobs rose 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.

Subdued Business Lending from the Federal Reserve Bank of Cleveland can be found here.

ADP National Employment Report May Apr Mar Y/Y 2011 2010 2009
Nonfarm Private Payroll Employment (m/m Chg., 000s) 133 113 200 1.8% 1.4% -1.0% -4.1%
 Small Payroll (1-49) 67 57 93 2.0 1.4 -0.9 -4.1
 Medium Payroll (50-499) 57 52 85 1.9 1.8 -0.9 -5.7
 Large Payroll (>500) 9 4 22 0.7 0.4 -1.8 -5.6
Goods Producing 1 -6 42 1.2 0.8 -4.8 -12.4
  Manufacturing -2 -6 21 0.7 1.3 -3.2 -11.4
Service Producing 132 119 158 1.9 1.5 -0.2 -3.2
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