ADP Report: Private Payroll Growth Negligible

The ADP National Employment Report, reported by the payroll processor, indicated that private nonfarm payroll growth deteriorated to 40,000 during December after a downwardly revised 173,000 November rise.The increase was the weakest since this past August. The U.S. Bureau of Labor Statistics employment figure for December will be published tomorrow. Last month, the 173,000 gain ADP's measure of private nonfarm payrolls was followed by a 64,000 rise in private nonfarm payrolls. According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90. The ADP sub-index for large payrolls tanked and fell 35,000, reversing all of the November rise. For medium sized payrolls, the increase fell to 9,000 which was the weakest rise since mid-2003. The sub-index for small payrolls fell back from the firmer gain in November payrolls and rose a still respectable 66,000. ADP compiled the 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 ADP National Employment Report data is maintained in Haver's USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months.

The full ADP National Employment Report can be found here, and the ADP methodology is explained here.

LAXEPA@USECON	December	November	Y/Y	2006	2005	2004
Nonfarm Private Payroll Employment (m/m Chg.)	40,000	173,000	0.9%	1.7%	1.8%	1.3%