ADP Report: Rate of Job Loss Continues to Moderate, But Slowly

It's part of a slowly developing trend, but the rate of job loss moderated again last month. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payrolls fell 298,000 during August after a revised 360,000 July decline that was slightly shallower than reported initially. The latest reading was the nineteenth consecutive monthly decline, but the monthly change was the smallest since October of last year and less than half the worst of this past March. The three-month annualized rate of decline in payrolls also eased to 3.9% from its March peak of 7.1%. 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 U.S. Bureau of Labor Statistics will report August payroll employment this Friday. For comparison, July's 360,000 worker decline in ADP's measure of private nonfarm payrolls was accompanied by a loss of 254,000 jobs in the BLS measure of private sector 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. ADP reported that small-sized payrolls fell the most last month and posted a 122,000 decline (-4.4%). That was similar to the 116,000 (-5.8% y/y) decline in medium-sized payrolls. Large payrolls fell by 60,000 (-5.6% y/y). The steady decline in service-producing industry employment continued. The 146,000 (-3.3% y/y) drop was the seventeenth consecutive monthly decline but in percentage terms the three-month rate of change moderated slightly to -2.3%. The recent declines are roughly half the worst from December through March. Medium-sized service payrolls fell 58,000 (-3.7% y/y) and small-sized payrolls dropped 59,000 (-2.9% y/y). Large service producing payrolls dropped by 29,000 (-3.5% y/y). In the goods producing sector there were 152,000 fewer jobs in August (-13.3% y/y). Here, the three-month rate of change eased again, but remained double-digit at -11.2% versus -17.1% at its worst. Small-sized payrolls fell 63,000 (-12.8% y/y) followed by a 58,000 (-13.7% y/y) drop in medium-sized payrolls. Large payrolls fell 31,000 (-13.1% y/y). In the manufacturing sector alone, payrolls fell an easier 74,000 (-12.8% y/y). 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, 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	August	July	Y/Y	2008	2007	2006
Total Nonfarm Private Payroll Employment (m/m Chg., 000s)	-298	-360	-5.2%	-0.5%	1.2%	2.0%
Small Payroll (1-49)	-122	-135	-4.4	-0.0	1.6	2.2
Medium Payroll (50-499)	-116	-153	-5.8	-0.5	1.2	1.9
Large Payroll (>500)	-60	-72	-5.6	-1.6	-0.1	0.4