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Economy in Brief

U.S. ADP Nonfarm Private Payroll Increase Disappoints in February
by Tom Moeller  March 3, 2021

• Modest job increase follows upwardly revised January reading.

• Reduced growth is broad-based amongst payroll sizes.

• Factory workforce size declines.

Job market strength moderated last month. The ADP National Employment Report indicated that nonfarm private sector payrolls increased 117,000 (-7.4% y/y) during February after rising 195,000 in January, revised from 174,000. December's change was revised to -75,000 from -78,000. A 200,000 February rise had been expected in the Action Economics Forecast Survey. The ADP report is based on survey data through February 12.

Medium-sized payrolls increased 57,000 (-7.8% y/y) last month following an 89,000 January rise, revised from 84,000. Small-sized payrolls improved 32,000 (-5.4% y/y) after gaining 55,000 in January, revised from  51,000. Large-sized payrolls increased 28,000 in February (-8.3% y/y) after January's 51,000 rise, revised from 39,000.

Within industry sectors, private service employment increased 131,000 (-8.1% y/y) after a 178,000 rise, revised from 156,000. Jobs in trade, transportation & utilities rose 48,000 (-5.1% y/y) after rising 14,000 in January. A 22,000 rise (-6.0% y/y) in the number of professional business services jobs extended their steady monthly job gain since May. The number of education & health services jobs rose 35,000 (-4.2% y/y) and have risen in each month since May. A 26,000 rise (-23.8% y/y) in leisure & hospitality hiring followed a 50,000 January gain. Jobs in financial services held steady (-1.8% y/y) after increasing 3,000 during each of the prior two months. The number of information sector jobs eased 3,000 (-10.6% y/y), down for the fourth straight month.

Employment amongst goods-producing firms weakened 14,000 (-4.1% y/y) after rising 17,000 in January, revised from 19,000. The number of factory sector jobs fell 14,000 last month (-4.6% y/y) after gaining 8,000. The size of construction sector payrolls eased 3,000 (-2.9% y/y) following an 8,000 increase. Employment in the natural resource & mining sector improved 3,000 in February (-9.1% y/y) after holding steady during each of the prior two months.

The Automatic Data Processing Research Institute survey covers 411,000 companies and includes about one-fifth of U.S. private payroll employment. The data are processed by Moody's Analytics Inc., then calibrated and aligned with the BLS establishment survey data. The ADP data cover private sector employment only.

The ADP National Employment Report data can be found in Haver's USECON database. Historical figures date back to 2001 for private employment and the industry breakdown, and 2005 for the business size breakout. The expectation figure is available in Haver's AS1REPNA database.

Lessons from History, Policy for Today from Mary C. Daly, President & CEO Federal Reserve Bank of San Francisco is available here.

ADP/Moody's National Employment Report Feb Jan Dec Feb Y/Y % 2020 2019 2018
Nonfarm Private Payroll Employment (m/m chg, 000s) 117 195 -75 -7.4 -6.4 1.4 1.9
 Small Payroll (1-49) 32 55 -8 -5.4 -5.8 0.2 0.8
 Medium Payroll (50-499) 57 89 49 -7.8 -7.2 1.9 2.2
 Large Payroll (>500) 28 51 -116 -8.3 -6.3 1.7 2.4
Goods-Producing -14 17 -5 -4.1 -4.1 1.5 3.0
  Construction -3 8 9 -2.9 -2.5 2.5 4.4
  Manufacturing -14 8 -14 -4.6 -4.7 1.0 2.1
Service-Producing 131 178 -71 -8.1 -6.8 1.3 1.7
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